META reports tonight. Let's cut through the noise.
Street wants $7.09 EPS (ex one-time item), $63.41B revenue. Options pricing ±12% — bigger than the 8% historical average. Puts priced over calls. Stock ran 23% in eight weeks, now pulling back.
Alphatica sees a beat: $7.35 EPS, $64.6B revenue. META has beaten EPS in 7 of last 8 quarters by 10.8% on average. Revenue beat every quarter for two years.
But the real number isn't EPS.
The Street cut Q3 operating income 14% in 90 days while leaving revenue flat. Implied margin dropped from 33% to 28%. FY2027 free cash flow consensus went from -$4.4B to -$29B in the same stretch. The market knows capex is coming. The question is whether the guide goes higher again. Last two times it did — Q1 2024 and Q3 2025 — stock fell 10–11% the next day despite beats.
Earnings quality is weak: $20.4B in stock comp (10.2% of revenue), one of the highest ratios at this scale. Management's internal accounting signals posted the worst single-year deterioration ever recorded. The most profitable ad business ever built, with weak accounting confidence.
Disclosure downgraded to neutral. Tone improvement from April never confirmed. Litigious language in the annual filing tripled since 2022 and sits at a series high. Legal docket is growing.
Short volume ratio peaked at 59.7% in late September, now 29.7% — well below normal hedging levels. Shorts left before the print.
$708.64 going in. 20.9x forward earnings, 35th percentile since 2019. Not cheap, not stretched. Beat is likely. The capex guide decides the stock.
$META $SPY
Street wants $7.09 EPS (ex one-time item), $63.41B revenue. Options pricing ±12% — bigger than the 8% historical average. Puts priced over calls. Stock ran 23% in eight weeks, now pulling back.
Alphatica sees a beat: $7.35 EPS, $64.6B revenue. META has beaten EPS in 7 of last 8 quarters by 10.8% on average. Revenue beat every quarter for two years.
But the real number isn't EPS.
The Street cut Q3 operating income 14% in 90 days while leaving revenue flat. Implied margin dropped from 33% to 28%. FY2027 free cash flow consensus went from -$4.4B to -$29B in the same stretch. The market knows capex is coming. The question is whether the guide goes higher again. Last two times it did — Q1 2024 and Q3 2025 — stock fell 10–11% the next day despite beats.
Earnings quality is weak: $20.4B in stock comp (10.2% of revenue), one of the highest ratios at this scale. Management's internal accounting signals posted the worst single-year deterioration ever recorded. The most profitable ad business ever built, with weak accounting confidence.
Disclosure downgraded to neutral. Tone improvement from April never confirmed. Litigious language in the annual filing tripled since 2022 and sits at a series high. Legal docket is growing.
Short volume ratio peaked at 59.7% in late September, now 29.7% — well below normal hedging levels. Shorts left before the print.
$708.64 going in. 20.9x forward earnings, 35th percentile since 2019. Not cheap, not stretched. Beat is likely. The capex guide decides the stock.
$META $SPY