Meta Earnings Show Capex Rise, New Class C Shares
Meta earnings raised capex guidance and authorized a non-voting Class C share, forcing traders to weigh heavier AI spending against financing flexibility.
KEY TAKEAWAYS
- Meta raised 2026 capex guidance to $135B-$145B, raising the lower bound by $5B.
- The board authorized a listed non-voting Class C share and declared a one-time stock dividend.
- Free cash flow fell to $784M while quarterly capex reached $34.9B, highlighting capital allocation strain.
HIGH POTENTIAL TRADES SENT DIRECTLY TO YOUR INBOX
Add your email to receive our free daily newsletter. No spam, unsubscribe anytime.
Meta Platforms Inc. reported stronger-than-expected third-quarter results on Oct. 21, 2026, raising the lower bound of its 2026 capital-expenditure outlook and authorizing a publicly listed, non-voting Class C share to support its AI expansion.
Quarterly Results and Capital Outlook
Meta posted third-quarter revenue of $64.6 billion for the period ended Sept. 30, 2026, a 26% increase from a year earlier and above analyst estimates of $63.4 billion. Net income rose to $9.9 billion, with diluted earnings per share of $3.83, compared with $2.7 billion and $1.05 in the prior-year quarter. The results reflected ongoing strength in advertising alongside investor interest in the company’s AI initiatives.
The company forecast fourth-quarter revenue between $73 billion and $76 billion, with a midpoint of $74.5 billion, exceeding the analyst consensus of $73.6 billion. It raised full-year expense guidance to $175 billion to $179 billion from $165 billion to $169 billion, reflecting a $9.9 billion charge in third-quarter general and administrative expenses tied to an August settlement with U.S. state attorneys general over teen mental-health litigation.
Capital spending remained heavy. Meta reported quarterly capital expenditures of $34.9 billion, including principal payments on finance leases, and raised its 2026 capex guidance to $135 billion to $145 billion, increasing the lower bound by $5 billion. The company attributed the rise to AI infrastructure needs such as chips and data centers and said it expects to continue aggressive investment in its core business and AI efforts.
Free cash flow fell sharply to $784 million from $8.6 billion a year earlier. While AI-driven ad growth and interest in the Muse models have buoyed investors, the decline highlights the high costs of scaling these initiatives amid elevated spending.
Authorization of Class C Shares
Meta’s board approved a publicly listed, non-voting Class C common stock and declared a one-time dividend of one Class C share for each outstanding Class A and Class B share, contingent on the effectiveness of an amended and restated Delaware certificate of incorporation. The intended effective date is Jan. 19, 2027. The company said the stock dividend will not change any shareholder’s voting power.
Class A shares will continue trading on Nasdaq, and Meta intends to qualify the new Class C shares for Nasdaq listing upon issuance. The board’s approval followed a unanimous recommendation from a special committee of independent directors. Meta said it will provide further details in a Form 8-K and an information statement filed with the SEC.
Available reporting described potential uses for the new shares, including financing acquisitions and recruiting AI talent. The combination of higher capex guidance, the quarterly spending run rate, and the issuance of tradable, non-voting shares illustrates the trade-offs Meta faces as it funds ambitious AI infrastructure while preserving its governance structure.
