Meta (META) Shares Slide After Free Cash Flow Turns Negative

What happened

Shares of Meta (META), the social media company, slid 7.0% on Thursday after its third-quarter results showed it spent more on data centers and equipment for AI than its business brought in.

Capital spending, including principal payments on finance leases, came to $34.91 billion in the quarter, against $32.79 billion of cash from operations, Meta said in its results release on Wednesday at 4:01 p.m. ET. That left free cash flow, the cash left over after big investments, at negative $2.12 billion, its first cash burn in more than a decade, Reuters and investingLive reported. Meta also narrowed its 2026 spending forecast to $135 billion to $145 billion, from $130 billion to $145 billion, which lifts the floor.

The business itself grew quickly: revenue rose 26% from a year earlier to $64.60 billion. The shares closed at $648.85, down 7.0% from the previous close, their worst day since 30 July.

Why it matters

Investors also balked at a new kind of share, Yahoo Finance reported. Meta’s board approved a publicly listed Class C stock with no voting rights, and holders are due to receive one Class C share for each Class A or Class B share in January 2027. On its own that works like a two-for-one stock split, and nobody’s slice of Meta changes. Meta said in a filing with the SEC that the shares could be used for “capital raising, employee compensation, potential acquisitions.”

That’s what worries investors. If Meta sells many new shares for cash, each existing share owns a smaller piece of future profits, which is called dilution. With no votes attached, it can do so without weakening Chief Executive Mark Zuckerberg’s control.

“The sooner the better in our view as it would remove the overhang,” JPMorgan analyst Doug Anmuth wrote, according to Yahoo Finance; an overhang is a pile of shares investors expect to be sold. Lenders were nervous too: the cost of insuring Meta’s debt against default hit a record after the results, Reuters reported.

What the market is telling us

Meta’s shares moved 5% or more on 17 of the last 252 sessions. The last move at least this big in the same direction was on 30 July 2026, when the stock fell 8.0%. The stock is down 1.7% this year, and at $648.85 it sits 16.6% below its 52-week closing high of $777.59 from 24 September 2026.

Our view: 26% revenue growth says the ad business is in fine shape; what the stock is now pricing is how much of that cash goes into data centers, and how many new shares Meta may sell to fund them.