Meta shares fall up to 9% in extended trading despite earnings beat on tax charge, capex outlook

Shares of Meta Platforms Inc., parent company of social media platforms Facebook, Instagram and others, fell as much as 9% in extended trading on Wednesday, despite its third quarter results surpassing expectations comfortably.

The company reported revenue of $51.24 billion, higher than the $49.41 billion expected, while its Earnings Per Share (EPS) at $7.25, was also higher than the $49.41 billion that the street anticipated. This was the first time that Meta's revenue crossed $50 billion in a quarter.

For the fourth quarter, Meta expects revenue to range between $56 billion to $59 billion. The mid-point of that range is higher than projections made by Wall Street analysts.

However, the stock fell after it took a one-time, non-cash income tax charge of up to $16 billion due to US President Donald Trump's implementation of the One Big Beautiful Bill Act. It also added that the law will result in "a significant reduction" in its cash tax payments for the rest of 2025 and future years.

Another aspect the street may not have liked is the increased capex guidance. Meta raised the lower end of that range to $70 billion from $66 billion earlier. It now expects to spend between $70 billion to $72 billion from $66 billion to $72 billion earlier. It also raised the lower end of its expenses guidance to $116 billion from $114 billion earlier.

Meta's Reality Labs hardware unit reported a loss of $4.4 billion during the third quarter, on just $470 million in sales. CFO Susan Li said on the earnings call that revenue for the Reality Labs in Q4 will also be lower compared to the same quarter last year.

“We’re still expecting significant year-over-year growth in AI glasses revenue in Q4 as we benefit from strong demand for the recent products that we’ve introduced, but that is more than offset by the headwinds to the Quest headsets,” Li said.

Advertising sales, which form a bulk of Meta's revenue surpassed analyst expectations with a $50.08 billion figure, compared to $48.5 billion estimates. Meta now has 3.54 billion daily active users across its apps, also higher than the 3.5 billion estimate.

Meta also recently signed a JV with Blue Owl Capital in a $27 billion deal to help fund and build a large data center in Louisiana.

Shares of Meta are down 7.7% in extended trading to $693.95. The stock is up 25% so far this year as of regular trade ending on Wednesday.

(With Inputs From Agencies.)