Key Takeaways
Meta stock fell about 9% in the past week (through Friday’s close). Most of the drop came after a third-quarter report that showed 26% revenue growth and negative free cash flow.- The ad business is still growing fast, and the selling is about how Meta pays for AI, including a new non-voting Class C stock that is partly for raising capital.
- A $25 billion New Mexico fine adds to the quarter’s $9.89 billion legal charge, though Meta’s cash covers the fine several times over.
- After the drop, Meta trades below its usual forward multiple, which makes it a buy for investors who can live with some dilution.
Meta Platforms (META) is down about 9% over the past week (through Friday’s close). Most of that came after a third-quarter report that was strong everywhere except cash. (The Nasdaq 100 fell just 2%.)
Ads grew 26%, and that wasn’t enough
Revenue rose 26% to $64.6 billion, ahead of the $63.41 billion analysts expected. Without a $9.89 billion legal charge, earnings per share would have been $7.40, against $6.80 expected. And fourth-quarter guidance of $73 billion to $76 billion has a midpoint above consensus.
But CFO Susan Li gave no 2027 budget. She said Meta plans “to continue investing aggressively to support both our core business and emerging AI initiatives.”
The AI bill is coming due
Third-quarter capex hit $34.91 billion, above the $32.79 billion of operating cash flow. That left free cash flow at negative $2.12 billion. It’s been building for years: capex took about 60% of operating cash flow in 2025, up from 32% in 2021…
…and Meta just raised the floor of its 2026 capex range to $135 billion. On top of that, Meta had $454.5 billion of non-cancelable contractual commitments as of Sept. 30.
Then there’s a new non-voting Class C stock, arriving in January 2027. It’s partly for raising capital. Meta has looked like the AI spender that doesn’t need outside money, unlike OpenAI. If it does sell new shares, the spending has to earn its keep. And on Thursday, Meta’s credit default swaps hit a record high.
TIKR tracks 63 analysts on Meta Platforms. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Meta Platforms, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Meta Platforms’ Analyst Ratings
Another $25 billion legal bill
Plus: the day Meta reported, a New Mexico court ordered it to pay $25 billion over the Cambridge Analytica scandal. Interest runs at 15% a year. Meta says it will win on appeal. Even if it doesn’t, its $82.5 billion of cash covers the fine more than three times over.
At 20x earnings, I’d load up
After the drop, Meta trades at about 20x forward earnings. That’s below its five-year average of 21x and far from its 29x peak in February 2025.
Analysts’ consensus target of $844 is about 31% above Friday’s close.
Meta’s ad business is paying for nearly all of the AI bet: operating cash flow covered 94% of third-quarter capex. And the stock costs less than usual for those earnings.
Meta is also lining up a second way to get paid. Chief AI Officer Alexandr Wang told Nikkei that Muse will lean on paid subscribers to compete with Chinese models.
I’d buy here, as long as you can live with some dilution once Class C arrives.
Meta is still building its 2027 budget, so the fourth-quarter report, expected around Jan. 27, is the one to watch. Another big jump in capex could keep free cash flow under pressure for a while.
So what is Meta stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what Meta could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
