Meta Platforms (META): Q3 2026 Earnings Review

Meta reported third-quarter 2026 results on Oct 21. Revenue of $64.60 billion rose 26%, beating the $63.37 billion consensus CNBC cited. GAAP diluted EPS of $3.83 fell short of the $5.75 consensus, though CNBC flagged the comparison as not clearly like-for-like. Fourth-quarter revenue is guided to $73 billion to $76 billion. The shares fell 6.98% to $648.85 on Oct 22.

What's behind Meta's results

1. Ads keep getting more expensive

Average price per ad rose 14% year over year, and ad impressions rose 10%. Daily active people reached 3.64 billion in September, up 3%, just under the 3.65 billion analysts expected. Fourth-quarter guidance of $73 billion to $76 billion carries a $74.50 billion midpoint, above the $73.73 billion consensus CNBC cited.

2. One legal charge explains most of the margin drop

Costs and expenses jumped 68% to $51.61 billion, cutting operating income 37% to $12.99 billion and the margin to 20% from 40%. A $9.89 billion charge from the settlement with 52 state attorneys general drove much of that. The agreement calls for payments of up to $18.59 billion. Excluding it, operating income would have been $22.88 billion versus $20.54 billion a year earlier, and EPS of $7.40.

3. Spending has outrun cash generation

Capital spending, including finance leases, hit $34.91 billion, and free cash flow was negative $2.12 billion. Management narrowed 2026 spending guidance to $135 billion to $145 billion, from $130 billion to $145 billion. Separately, Meta will issue a non-voting Class C share in January 2027 as a stock dividend. The Class A price is then expected to reflect a two-for-one split.

Historical Context

Meta's cash generation has eroded for four straight quarters. Revenue rose 33% in Q1 2026, then 28%, then 26% year over year in Q3. Free cash flow fell from $14.08 billion in Q4 2025 to $12.39 billion, then $784 million, then negative $2.12 billion. From the Oct 16 close through Oct 22, Meta lost 8.53% while the S&P 500 index rose 0.05%.