Meta delivered a record quarter on Wednesday, and investors spent Thursday worrying about what it will cost to keep going. Shares in the Facebook and Instagram owner fell sharply, shedding more than 100 billion dollars in market value and dragging the Nasdaq down 2.6 percent, its biggest one-day fall since June. Nvidia slid 4.4 percent as the sell-off spread. The trigger was not weak business. It was the scale of Meta's artificial intelligence spending, and a new plan to help pay for it.
The underlying numbers were strong. Third-quarter revenue rose 26 percent from a year earlier to 64.6 billion dollars, ahead of the range Meta itself had guided. Advertising drove the result, with ad impressions up 10 percent and the average price per ad up 14 percent. An average of 3.64 billion people used at least one of Meta's apps each day, up 3 percent. The company also guided fourth-quarter revenue to between 73 billion and 76 billion dollars, above what analysts had expected.
Spending, however, is growing far faster than sales. Total costs jumped 68 percent to 51.6 billion dollars, including a 9.89 billion dollar legal charge tied to a multistate settlement. Operating income fell 37 percent to about 13 billion dollars. Capital spending reached 34.91 billion dollars in the quarter, more than the cash operations generated, leaving free cash flow negative at 2.12 billion dollars. Meta narrowed full-year capital spending guidance to 135 billion to 145 billion dollars, raising the floor from 130 billion, and said future commitments for data centers, energy, hardware and cloud capacity now total about 825 billion dollars, up from roughly 700 billion in July.
Alongside the results, Meta disclosed a structural change designed for that bill. Its board approved a new class of non-voting Class C stock on October 19. Every holder of Class A and Class B shares will receive one Class C share for each share held, in a dividend that works as a two-for-one split when the new shares take effect on January 19, 2027. Because Class C shares carry no vote, Meta can later sell them to raise cash, or use them for pay and acquisitions, without diluting founder control. Chief executive Mark Zuckerberg holds about 60.6 percent of the voting power on an economic interest of about 13.4 percent, through roughly 341 million super-voting Class B shares.
A securities filing explains why Meta wants that flexibility. Management told advisers its forecasts showed a need to raise hundreds of billions of dollars over several years, starting as early as this fall, and advisers at Moelis estimated Meta could raise about 700 billion dollars in equity before Zuckerberg's voting power fell below 50 percent. Chief financial officer Susan Li pushed back on the largest reading, calling it a theoretical maximum used to test founder control, not a description of present plans, and said Meta has nothing to announce on equity financing.
Meta does have an early return to point to. Zuckerberg told analysts more than 10 million people in the United States and Canada have set up Muse, the personal AI agent launched in August, in about six weeks, with roughly a quarter using it daily and shopping already its top use. Whether that audience turns into revenue fast enough is now the central question. Meta is asking investors to fund one of the largest buildouts in corporate history on the promise that agents and advertising tools will eventually pay for it. Thursday's rout shows how much patience that promise still has to earn.