Meta stock fell about 7% on Thursday, Oct. 22, 2026, its worst day since July, even though the company’s third-quarter revenue of $64.6 billion beat expectations. The reasons, according to Kiplinger and Forbes, were an earnings miss, negative free cash flow and a 2026 capital spending forecast of $135 billion to $145 billion. Meta also announced a new non-voting share class. This is general information, not investment advice.
Meta Stock Falls 7%: What Happened
Meta reported results after the market closed on Wednesday, Oct. 21. Forbes reported that the shares rose more than 3% in after-hours trading as investors digested the headline numbers.
That optimism did not last. By Thursday’s session the mood had turned, and Forbes noted the stock was down about 6% in the first half hour of trading. Kiplinger put the full-day decline at roughly 7%, the worst for Meta stock since July.
The move landed on a rough day for the whole market. AP reported that the Nasdaq fell 2.6% as AI shares dropped on concerns that high interest rates could threaten the AI boom. Our Oct. 21 stock market recap shows how different the mood was just one day earlier.
The Numbers Behind the Meta Stock Drop
Here are the key third-quarter figures as reported by Kiplinger and Forbes.
| Item | Reported figure | Source |
|---|---|---|
| Revenue | $64.6 billion, up 26% year over year, a beat | Kiplinger, Forbes |
| Earnings per share | $3.83, below estimates | Kiplinger |
| Quarterly capital spending | $34.91 billion | Forbes |
| 2026 capex guidance | $135 billion to $145 billion, from a low end of $130 billion | Kiplinger |
| Free cash flow | Turned negative | Kiplinger |
A revenue beat usually helps a stock, but Meta stock did not get that lift. Here, it was outweighed by the other three lines: an earnings miss, higher spending and negative free cash flow.
Why a Revenue Beat Still Sank Meta Stock
Meta stock, like any share, trades on expectations about the future, not just last quarter’s results. Investors had to weigh strong sales growth against a bigger bill for the data centers and chips behind AI.
The guidance change is a good example for anyone following Meta stock. Meta did not announce a dramatic new number. It narrowed the range and raised the low end from $130 billion to $135 billion. That tells investors the company is more certain it will spend at least that much, and the top of the range stays at $145 billion.
The wider backdrop made it worse. AP said tech stocks sold off on worries about the AI boom, and Steve Sosnick of Interactive Brokers told coverage of the session: “Semiconductors and the Nasdaq have been elevated to a huge degree by investors’ rush to participate in the AI build-out.” When a market is that crowded into one theme, a large spending number can trigger selling.
Capex vs. Free Cash Flow: What the Terms Mean
Two terms drove the debate over Meta stock, so here is a plain-English guide.
What is capex?
Capex, short for capital expenditures, is money a company spends on long-lived assets such as data centers, servers and networking equipment. For Meta, most of it supports AI. Capex is not an expense in the same way as salaries. It is usually spread over time through depreciation, which shows up in earnings later.
What is free cash flow?
Free cash flow is the cash a business generates from operations minus its capital spending. It is the money left over to pay dividends, buy back stock, make acquisitions or pay down debt. When it turns negative, as Kiplinger said it did for Meta, spending on assets is outpacing the cash the business is producing in that period.
That is not automatically a problem. Companies in heavy build-out phases often have weak free cash flow for a while. The question investors ask is whether the spending will eventually earn a return, and the answer is not yet known.
Meta Stock and the New Class C Shares
Alongside the earnings, Meta announced a change to its share structure. Kiplinger reported that new non-voting Class C shares will begin trading in January 2027, together with a two-for-one stock split. Forbes described the distribution as one new Class C share for each existing Class A or Class B share, also in January 2027.
The two accounts are consistent on timing and on the non-voting feature, but the exact mechanics of how the split and the new class fit together are not fully clear from the coverage we reviewed. Holders should check the company’s filings for the final terms. The Meta investor relations site and the SEC’s EDGAR database are the places to confirm details.
What dual-class shares and splits mean for ordinary holders
In general terms, a company with multiple share classes gives different groups different voting rights. Class A shares typically carry one vote each, while Class B shares carry more, which keeps control with insiders. A new non-voting class adds shares that carry economic ownership but no vote.
A stock split changes the number of shares, not the value of your stake. In a two-for-one split, each share becomes two, and the price per share is roughly halved, all else equal. Your total holding value does not change just because of the split.
Forbes tied the move to Mark Zuckerberg’s control. It reported that his voting power could fall from 60.6% to 53% if Class B shares were sold under a proposed billionaire wealth tax, and that he agreed to stay in California for eight years. Forbes estimated his net worth at $223.8 billion, down $15.5 billion on the day, as of mid-morning. Whether the new class is connected to that tax proposal was not spelled out in the coverage we saw.
Meta vs. Tesla: Two Different Spending Choices
Tesla’s report arrived the same week and offered a contrast. Kiplinger said Tesla beat third-quarter earnings per share at $0.48 on revenue of $28 billion, and cut its 2026 capital spending plan to $20 billion from $25 billion. Forbes described the prior figure as over $25 billion. Operating expenses rose 39%.
Tesla shares fell 3.1% anyway, so Meta stock was not alone. The comparison shows that investors were not simply punishing high spending. They were questioning growth, margins and returns across the technology sector at once.
The Bull Case: A “Capex Harvest Cycle”
Not everyone saw the sell-off in Meta stock as justified. Stephen Ju of UBS Global Research said, “In our view, Meta is entering a capex harvest cycle,” and expects AI investments to boost advertising performance.
Forbes also reported that Zuckerberg said on the earnings call that the company’s Muse AI product will be “highly profitable” with billions of users, and that it passed 10 million downloads in 40 days. Those are management and analyst views, not results, and they depend on spending turning into revenue.
The earlier trend adds context. Our Oct. 20 stock market post noted that Meta had slipped about 2% to $689 that day, before the earnings report.
What We Still Do Not Know About Meta Stock
- How the Class C shares will trade relative to the voting shares once they are distributed.
- Whether free cash flow will recover in coming quarters, and by how much.
- How much of the 2026 capex range will actually be spent, since the low end rose but the ceiling stayed at $145 billion.
- Whether Thursday’s decline reflects a company-specific reset or the broader pullback in AI shares.
What to Watch Next for Meta Stock
- The Fed, Oct. 27-28. Korea Times reported expectations that the Federal Reserve will hold rates. Interest rate signals can move growth stocks like Meta.
- Capex trend. Look for any change in the $135 billion to $145 billion range in future reports.
- Free cash flow. A return to positive territory would ease the main concern raised this week.
- Next earnings report. Watch whether ad revenue growth keeps pace with the spending.
- Share class filings. Details on the January 2027 distribution should appear in company documents.
For an example of how earnings reactions can swing a stock, see our Netflix earnings preview.
The Takeaway for Investors
The lesson from the Meta stock drop is to read beyond the revenue line. Check earnings per share, free cash flow and the capital spending forecast together, because that combination explains Thursday’s reaction. If you own Meta directly or through an index fund, find out how much of your portfolio rides on a few AI-heavy names. Then review the company’s filings before the January 2027 share changes arrive. This article is for information only and is not investment advice.
