Meta Tops Q3 Revenue Forecast, Adds New Stock Class
Meta beat Q3 forecasts with $64.6B revenue, up 26%, but a $9.9B legal charge cut profit. New Class C shares will fund AI spending; Q4 sales guided at $73-76B.
Meta reported record third-quarter revenue of $64.6 billion on Wednesday, up 26% from a year ago and ahead of Wall Street's $63.3 billion forecast. But a $9.89 billion legal charge from its August settlement with 52 US state attorneys general cut operating profit by more than a third, and the company created a new class of non-voting stock to help pay for its AI buildout.
Revenue beats, ads carry the growth
Total revenue rose 26% to $64.601 billion, beating analyst estimates of roughly $63.3 billion. Advertising remained the growth engine: ad revenue came in at about $63.1 billion against forecasts near $61.9 billion, and the Family of Apps segment covering Facebook, Instagram and WhatsApp reached about $64.2 billion, also ahead of expectations.
Legal charge hits profit hard
The quarter included a $9.89 billion charge tied to Meta's August agreement with 52 US attorneys general over litigation concerning teen mental health and social media. Operating income fell 37% to $12.99 billion, and the operating margin was cut in half to 20% from 40% a year earlier. Diluted earnings per share landed at $3.83. Meta said EPS would have been $7.40 without the legal charge, which the market largely treated as a one-time hit.
Class C shares to fund AI spending
Meta is spending so much on artificial intelligence that it is creating a whole new kind of share to help pay for it. The company will create a publicly listed, non-voting Class C common stock with an effective date in January 2027, giving it a new way to raise money, pay staff and fund deals while Mark Zuckerberg keeps control. "The creation of the Class C common stock will continue the founder-led model that has driven the company's success since its inception," Meta said in its earnings release. Capital spending guidance for 2026 was narrowed to $135 billion to $145 billion, raising the low end of the range. Full-year total expenses were lifted to $175 billion to $179 billion to incorporate the $9.9 billion legal charge. Heavy infrastructure spending pushed free cash flow to negative $2.1 billion, the first time it has gone negative since Meta became a public company.
Guidance and the AI bet
For the fourth quarter, Meta guided revenue of $73 billion to $76 billion, with the midpoint above analyst consensus. In the Reality Labs division, revenue of about $440 million missed estimates, but its operating loss of about $4.1 billion was narrower than the $5.1 billion analysts had expected. "We hit major milestones this quarter toward delivering personal superintelligence for everyone - including launching Muse and Muse Wonder, our first frontier model," Meta CEO Mark Zuckerberg said. "Our investments are paying off, the core business is strong, and we're seeing velocity across the board." Meta's shares jumped in after-hours trading as investors looked past the one-time legal charge and focused on the record revenue and stronger-than-expected fourth-quarter guidance.
Sources
Wall Street Journal - https://www.wsj.com/articles/metaplatforms-meta-3q-earnings-report-2026-stock-f28d64c2 ZeroHedge - https://www.zerohedge.com/markets/meta-jumps-after-q3-earnings-beat-boosts-guidance MetricsHour - https://metricshour.com/blog/meta-platforms-inc-meta-q3-2026-earnings-oct-21-2026/ Invezz - https://invezz.com/news/2026/10/21/meta-stock-jumps-on-earnings-but-25b-penalty-raises-stakes/ Shacknews - http://www.shacknews.com/article/151099/facebook-meta-q3-2026-earnings-results