Meta Stock Falls 6% as AI Spend Turns Cash Flow Negative
Meta stock fell roughly 6% on Thursday after the company reported negative free cash flow in its third-quarter earnings and lifted the floor of its 2026 capital spending forecast. The sell-off came as investors weighed heavy artificial intelligence investment against the cash the business is actually producing.
Revenue was strong, but the cash picture and a fresh share structure change put the spotlight on how Meta funds its growth.
Meta Stock Reaction After Q3 Earnings
Shares of the Facebook and Instagram parent slid about 6% on Thursday, a day after the earnings release.
Free cash flow came in at negative $2.12 billion for the quarter. That is a notable shift for a company known for generating large amounts of cash from advertising.
Meta also narrowed its capital expenditure outlook upward. It now expects full-year capex of $135 billion to $145 billion, up from a previous range of $130 billion to $145 billion. Only the bottom of the range moved, but it signals that spending will not slow down.
Revenue Beat, But Earnings Per Share Raise Questions
On the top line, Meta delivered. Third-quarter revenue rose 26% from a year earlier to $64.60 billion, ahead of the $63.37 billion analysts expected.
Earnings per share were reported at $3.83. Wall Street had been looking for $5.75 per share. It was not clear whether the two figures are directly comparable, so investors will likely want more detail before drawing firm conclusions.
Credit Default Swaps Hit Record Highs
The cost of insuring Meta’s debt also jumped. The spread on the company’s five-year credit default swaps reached all-time highs on Thursday.
A wider spread points to growing credit concerns among investors. It suggests the market is paying closer attention to how Meta finances its expanding AI plans.
AI Spend Management Under the Microscope
Meta’s numbers have turned AI spend management into a central question for shareholders. Building data centers and training advanced models requires enormous upfront investment, and the returns can take years to appear.
The quarter shows how quickly that spending can outrun cash generation, even for a business growing revenue at 26%.
The same issue applies well beyond Meta. Gen AI spend management is becoming a priority for companies of all sizes that are budgeting for cloud computing, model access, and specialized chips. Tracking those costs against real business results is now a core finance task.
New Class C Nonvoting Stock Explained
Alongside its results, Meta announced plans to create a new class of nonvoting Class C common stock. The company said the move is meant to maintain its “founder-led structure” and give it the ability to finance its growth.
Many readers searching for a Meta stock split may see this news and assume the two are linked. They are not the same thing. A stock split increases the number of shares and lowers the price per share. Creating a new nonvoting class changes who holds voting power. The source report does not mention a stock split.
Zuckerberg and the California Wealth Tax
Meta’s SEC filing also addressed a political and financial risk. The company said CEO Mark Zuckerberg could leave California if the proposed “California Wealth Tax” passes.
According to the filing, he could become liable for a significant, multi-billion-dollar tax payment based on his ownership of company stock. The filing noted that Zuckerberg was convinced to stay in California by the new stock plan.
What Investors Should Watch Next
Anyone reading a Meta stock analysis July 2026 report should keep in mind that the picture has changed since then. Negative free cash flow, record credit default swap spreads, and a higher capex floor are now part of the story.
Key points to track in coming quarters:
- Whether free cash flow returns to positive territory
- How spending within the $135 billion to $145 billion capex range develops
- Whether credit default swap spreads ease or widen further
- How the Class C share plan is received by shareholders
Frequently Asked Questions
Why did Meta stock fall 6% on Thursday?
Shares dropped after Meta reported negative free cash flow of $2.12 billion for the third quarter and raised the bottom of its full-year capex range. Record-high credit default swap spreads added to investor concern.
Is Meta stock halal?
There is no single answer, because halal status depends on the screening standard used. Scholars and screening services typically look at business activities and financial ratios such as debt levels. Check the latest screening from a trusted Shariah advisor or index provider before investing.
Is there a Meta stock split coming?
The earnings report did not announce a stock split. Meta did say it will create a new class of nonvoting Class C common stock, which is a different move.
What is Meta’s capex guidance for the full year?
Meta now expects full-year capital expenditures of $135 billion to $145 billion. The previous range was $130 billion to $145 billion.
What is gen AI spend management?
Gen AI spend management is the practice of tracking and controlling costs tied to generative AI, including computing power, model usage, and infrastructure, so spending stays linked to business value.
How did Meta’s revenue perform in Q3?
Revenue rose 26% year over year to $64.60 billion, beating analyst expectations of $63.37 billion.