Meta Stock Sinks After-Hours As $16B Tax Provision Hits Q3 Profit — But Retail Smells A Bargain Amid Zuckerberg’s AI Optimism

• The company incurred a $15.93B provision for a one-time, non-cash income tax charge related to the implementation of the Trump administration’s “One Big Beautiful Bill Act.”
• Citing higher computing needs, CFO Susan Li said capex dollar growth will be notably higher in 2026, and total expenses will grow at a significantly faster rate. 
• An analyst expects 2026 revenue growth (18%) to trail expense growth (35%) significantly.

Meta Platforms, Inc. (META) stock plunged nearly 7.5% in Wednesday’s extended session after the social-media giant reported an earnings decline, stung by a one-time tax provisioning, but revenue and outlook exceeded forecasts. While the company's higher spending plans also dented sentiment, retail traders jumped onto the bullish bandwagon.

As of the last regular close, Meta’s stock gained about 29% year to date.

Meta’s Q3 Earnings Snapshot

The provision for a one-time, non-cash income tax charge related to the implementation of the Trump administration’s “One Big Beautiful Bill Act” ($15.93 billion) dented Meta’s bottom-line results for the fiscal-year 2025 third quarter. The company, however, clarified that it expects a significant reduction in its U.S. federal cash tax payments for the remainder of 2025 and future years.

Here’s how Meta’s key numbers panned out:

-Earnings per share (EPS): $1.05 Vs. $6.67 consensus (Fiscal.ai-compiled)

-Revenue: $51.24 billion Vs. $49.41 billion consensus

As an extension, operating margin contracted by three points to 40%. The Menlo Park, California-based company said that if not for the increased tax provisioning, its EPS would have increased to $7.25 from $6.03 a year ago. 

Advertising accounted for 98.6% of Meta’s total revenue, while Reality Labs' revenue climbed 74% to $470 million, and it incurred an operating loss of $4.43 billion. Reality Labs includes contributions from the company’s augmented reality (AR) and virtual reality (VR) hardware and software business, including its Quest smartglasses. Capital expenditure (Capex) during the quarter was $19.37 billion.

Meta CEO Mark Zuckerberg said, “We had a strong quarter for our business and our community.”

Commenting on the results, Deepwater Asset Management’s Gene Munster said the adverse stock reaction is due to expenses growing faster than revenue, driven by third-party cloud. He noted that the September quarter revenue grew 26%, slower than the 32% growth in costs. He expects revenue growth for 2026 (18%) to trail expense growth (35%) significantly.

Meta’s Key Operational Metrics:

-Family daily active people: 3.54 billion, up 8% year over year (YoY) and up 1.7% sequentially

-Ad impressions: Up 11% YoY

-Average price per Ad: Up 9% YoY

What’s Retail Saying About Meta’s Earnings

On Stocktwits, retail sentiment toward Meta stock flipped to ‘extremely bullish’ as of late Wednesday from ‘bearish’ a day ago, and the message volume perked up to ‘extremely high’ levels.

A bullish watcher said they bought the dip. 

Another user called the quarter ‘great’ and noted that the capex increase was negligible in the “grand scheme” of things. They expected the stock to recover from the post-market slump.

Meta’s Outlook

Zuckerberg said, “Meta Superintelligence Labs is off to a great start and we continue to lead the industry in AI [artificial intelligence] glasses. If we deliver even a fraction of the opportunity ahead, then the next few years will be the most exciting period in our history.”

Meta guided fourth-quarter revenue in the range of $56 billion to $59 billion, ahead of the $57.26 billion consensus, with strong ad revenue growth likely being partially offset by lower revenue at the Reality Labs business compared to a year ago. The company attributed the YoY decline in Reality Labs to the lapping of the Quest 3S launch in the fourth quarter of last year, as well as retail partners procuring Quest headsets during the third quarter to prepare for the holiday season.

The company guided to a full-year capex of $116 billion to $118 billion, with the lower end raised from the earlier $114 billion forecast.

CFO Susan Li said, “We expect the set of investments we are making within our ads and organic engagement initiatives next year will enable us to continue to deliver strong revenue growth in 2026, while our progress on AI models and products will position us to capitalize on new revenue opportunities in the years to come.” Citing higher computing needs, Li said capex dollar growth will be notably higher in 2026, and total expenses will grow at a significantly faster rate. 

For updates and corrections, email newsroom[at]stocktwits[dot]com.

Read Next: Amazon Layoffs Draw Wall Street Attention Ahead Of Earnings On Thursday

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