TLDR
- Meta (META) stock rose about 2.5% in extended trading after Q3 revenue of $64.6 billion topped the $63.37 billion estimate.
- Q3 EPS was $3.83, including a $9.9 billion legal charge. Without it, EPS would have been $7.40.
- Q4 revenue guidance of $73 billion to $76 billion came in above the $73.73 billion estimate.
- Operating margin fell to 35% from 40%, and free cash flow turned negative.
- Morgan Stanley raised its price target to $820 from $775 and kept an Overweight rating.
Meta (META) stock climbed about 2.5% in extended trading Wednesday after the company reported third-quarter results. It had finished the regular session up 0.5%.
Revenue hit $64.6 billion, ahead of the $63.37 billion Wall Street expected. That is up 26% from a year ago.
This marks the 17th quarter in a row that Meta has beaten sales estimates. The streak keeps going, even as costs climb.
Earnings per share came in at $3.83. That figure includes a $9.9 billion charge tied to an August multistate child-safety settlement.
Strip out the charge, and EPS would have been $7.40. Analyst targets varied by source, with Barronās citing $6.54 and CNBC noting $5.75.
CNBC said it was unclear whether the reported number was comparable to that $5.75 estimate. So the EPS āmissā depends on which scorecard you use.
Guidance and Spending Details
For the fourth quarter, Meta expects revenue of $73 billion to $76 billion. The $74.5 billion midpoint sits above the $73.73 billion LSEG estimate.
The company also nudged up the midpoint of its full-year capital spending guidance. Capex may reach as high as $145 billion this year.
Third-quarter capex came in below expectations. Free cash flow still turned negative, and analysts do not see it returning until 2029.
Costs rose faster than sales. Even without the legal charge, operating margin slid from 40% to 35%.
Meta also has nearly $700 billion in long-term supply and lease commitments. Headcount, on the other hand, fell 15% from last year.
Muse Moves to the Front
CEO Mark Zuckerberg said Meta launched Muse and Muse Wonder, its first frontier model. He called the next phase āmore operational,ā focused on scaling the product, growing revenue and cutting compute costs.
Muse debuted in September and helped Meta post its best month on Wall Street since 2022. Similarweb data shows it has more than 3 million daily users, still under 0.1% of Metaās user base.
The stock ticked higher during Zuckerbergās remarks, then pulled back. CFO Susan Li said Museās compute needs mean total serving costs are expected to rise.
Morgan Stanleyās Brian Nowak lifted his price target to $820 from $775 on Sunday and kept his Overweight rating. He also urged investors to keep adoption rates in perspective.
Meta also announced a new class of non-voting stock, called class C. Holders of class A and class B stock will each receive an equal amount in a special dividend after January 19.
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