Meta Platforms beat Wall Street's sales forecast and announced a stock split, yet its shares tumbled the next day. The reason comes down to one number investors are watching closely across Big Tech: how much cash is left after the AI spending.
After the bell on Wednesday, Oct. 21, Meta reported third-quarter revenue of $64.6 billion, up 26% from a year earlier. It also unveiled a new class of non-voting shares that will work like a two-for-one split. Shares briefly rose after hours. By Thursday afternoon, Oct. 22, they had fallen sharply.
Why did Meta stock fall after beating estimates?
Meta's stock fell because its huge AI building spree outran the cash its business brought in. In the third quarter, Meta spent $34.91 billion on capital projects such as data centers, more than the $32.79 billion of cash its operations generated. That left free cash flow negative at about $2.1 billion.
Free cash flow is the money a company has left after paying for its operations and its big investments. It is what usually funds dividends and stock buybacks. A year earlier, Meta's quarterly free cash flow was $10.63 billion, according to the company's earnings release. Meta made no stock buybacks at all in the first nine months of 2026, compared with $3.33 billion of repurchases in the third quarter of 2025.
Meta also narrowed its 2026 capital spending forecast to $135 billion to $145 billion, from a prior range of $130 billion to $145 billion. In other words, the low end went up.
The market reaction was swift. Meta closed at $697.52 on Wednesday, per Fast Company. As of 3:33 p.m. ET on Thursday, Oct. 22, Yahoo Finance's market blog showed shares down 7.77% at $643.30. Reuters reported that Meta fell more than 5% and helped drag the broader market lower, as its new non-voting stock plan renewed worries about how much the company has committed to spend.
"Periodically, when they look at current earnings and the amount they're going to have to spend," investors grow uneasy that AI stocks are overpriced, Rick Meckler, a partner at Cherry Lane Investments, told Reuters.
How strong was the quarter underneath the headlines?
The…
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Compound growth estimate
Estimated total
$17,175
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$13,000
This is an estimate, not a prediction. Monthly compounding; taxes, fees and inflation are excluded.
This article is for educational purposes only and isn't personalized financial, tax or legal advice. Consider talking with a qualified professional about your situation.
Kiara Miller — Founder & Editor
Kiara Miller is the founder and editor of The Evergreen Edit. He has been doing independent finance research for two decades and reviews every article before it's published.
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