Meta Stock Jumps After Record $64.6 Billion Quarter, 2-for-1 Split, Despite $9.9 Billion Teen Mental Health Charge
Meta Platforms shares climbed in after-hours trading Wednesday after the company posted record quarterly revenue and announced a 2-for-1 stock split.
The Facebook and Instagram parent reported third-quarter revenue of $64.6 billion, up 26% from $51.2 billion a year earlier, according to the company’s earnings release. Analysts had expected about $63.3 billion.
Shares rose about 3.8% to roughly $724 after the bell, Investing.com reported, adding to a small gain during the regular session.
Earnings were weighed down by a $9.89 billion charge tied to Meta’s August agreement with 52 state attorneys general to resolve litigation over teen mental health and social media. That deal calls for payments of up to about $18.59 billion.
Including the charge, Meta earned $3.83 per diluted share, compared with the $3.56 analysts expected, Yahoo Finance reported. The company said earnings would have been $7.40 per share without it.
What the Split Means for Shareholders
Meta said it is creating a new Class C common stock. Each holder of Class A shares will receive one non-voting Class C share, which works as a 2-for-1 split, according to Yahoo Finance.
The structure lets Meta issue stock to help pay for its artificial intelligence buildout without diluting CEO Mark Zuckerberg’s voting control of the company.
Zuckerberg pointed to the launch of Muse and Muse Wonder, which he called Meta’s first frontier AI model. “Our investments are paying off, the core business is strong, and we’re seeing velocity across the board,” he said in the release.
Those investments are costly. Total costs and expenses rose 68% to $51.6 billion, including the legal charge, and operating margin fell to 20% from 40% a year earlier.
Capital spending reached $34.9 billion in the quarter. Free cash flow was negative $2.1 billion, even as operating cash flow came in at $32.8 billion.
Meta tightened its full-year capital spending forecast to between $135 billion and $145 billion, raising the low end from $130 billion, Yahoo Finance reported.
The advertising business that pays for all of it kept growing. Ad impressions rose 10% and the average price per ad rose 14% from a year earlier, the company said.
About 3.64 billion people used at least one Meta app each day on average in September, up 3% year over year.
Meta also continued to shrink its workforce. Headcount stood at 66,775 at the end of September, down 15% from a year earlier.
For the fourth quarter, Meta forecast revenue of $73 billion to $76 billion. It raised its full-year expense outlook to $175 billion to $179 billion to account for the settlement charge.
Excluding that charge, the company said it still expects 2026 operating income to top last year’s.
The company ended the quarter with $82.45 billion in cash and marketable securities and paid $1.36 billion in dividends.
Meta’s report kicks off earnings season for Big Tech, where investors are weighing record AI spending against how quickly it turns into profit.
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