What Is Driving The Move In Meta Stock

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Shares of Meta Platforms (META) fell 7.0% on Thursday, October 22, 2026, while the S&P 500 lost 1.2%. The drop came a day after Meta reported its third-quarter results and raised the low end of its 2026 spending forecast. News reports said investors were weighing growth in its new AI agent, Muse, against rising AI costs. Is Meta still earning enough cash to pay for what it is building?

Meta Spent More Cash Than It Brought In

Filings data showed Meta's free cash flow, the cash left after capital spending, at negative $1.16 billion in fiscal Q3 2026, against a positive $11.2 billion a year earlier. On the call, management gave its own figure of negative $2.1 billion, because it also counts finance-lease payments as capital spending. On the October 21 call, management also said capital spending reached $34.9 billion in the quarter, driven by servers, data centers and network infrastructure.

Meta does not plan to spend less for the full year. Management now expects 2026 capital spending of $135 billion to $145 billion, narrowed from a prior range of $130 billion to $145 billion. News reports on October 22 said the stock sank as free cash flow turned negative and Meta raised the low end of that range. Alphabet, Amazon and Microsoft fell between 2.2% and 4.6% the same day, so the selling hit the large tech names, but it hit Meta the hardest.

Meta's Operating Margin Halved From A Year Ago

Meta kept 20.1% of its fiscal Q3 2026 revenue as operating profit, against 40.1% in fiscal Q3 2025. Management said on the call that most of that drop came from a $9.9 billion legal charge tied to the August 2026 multistate attorneys general agreement.

Meta's borrowing also rose over the same year. Filings data showed Meta ended September 2026 with $115 billion of total debt obligations-including roughly $31 billion of finance-lease liabilities-more than double the $51.1 billion reported a year earlier. On the call, management cited $83.7 billion of debt, focusing solely on funded borrowings and senior notes. The company also created a new class of nonvoting shares that management said could be used for capital raising, though it has no specific financing plans to announce. Alongside its ad income, Meta now appears to be paying for part of the build-out with borrowed money.

Is Meta's Ad Business Still Growing As Fast?

Yes. Meta's revenue grew 26.1% from a year earlier in fiscal Q3 2026, about the same as its 26.2% growth in fiscal Q3 2025. Ads brought in $63.1 billion of the quarter's sales. Management said the average price per ad rose because ads performed better and the economy improved.

Management expects fourth-quarter revenue of $73 billion to $76 billion, against $64.6 billion in the third quarter. Free cash flow is the measure to watch at Meta's next report, expected in January 2027. Management said that report is typically when it gives guidance for the next year. Meta's Family of Apps is now used by 3.64 billion people each day.

Does This Mean You Should Act On META?

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