Meta delivered a solid earnings beat Wednesday but investors weren't buying it. The social media giant's stock tumbled 9% in after-hours trading despite revenue jumping 26% year-over-year to $51.24 billion. The culprit? A staggering $15.93 billion one-time tax charge tied to President Trump's One Big Beautiful Bill Act that caught Wall Street off guard and overshadowed otherwise strong fundamentals.
Meta just proved that even beating Wall Street's expectations isn't enough when you hit investors with a $15.93 billion tax surprise. The company's third-quarter results sent shares plummeting 9% in extended trading Wednesday, turning what should have been a victory lap into damage control.
The numbers tell two different stories. Revenue soared 26% year-over-year to $51.24 billion, crushing analyst estimates of $49.41 billion and marking the company's strongest growth since Q1 2024. Adjusted earnings per share hit $7.25, well above the $6.69 consensus. But none of that mattered once investors saw that massive tax hit.
"The implementation of President Donald Trump's One Big Beautiful Bill Act resulted in the one-time, non-cash income tax charge," Meta explained in its earnings release. The company expects the new tax law to actually reduce its federal cash payments going forward, but that cold comfort didn't stop the after-hours selloff.
CEO Mark Zuckerberg used the earnings call to double down on AI spending, raising the company's capital expenditure guidance to $70-72 billion for 2025 - up from the previous $66-72 billion range. "Meta consistently requires more computing power for its artificial intelligence initiatives," he told analysts, defending the massive data center investments that have spooked some investors this year.
The AI bet is showing mixed results across Meta's portfolio. The company's Reality Labs division - home to its VR headsets and AI glasses - posted a $4.4 billion loss on just $470 million in revenue. But there's a bright spot: the new Ray-Ban Display glasses launched in September are completely sold out, with demo appointments booked through the end of November.
"We're going to have to invest in increasing manufacturing and selling more of those," Zuckerberg said, hinting at supply constraints for what could be Meta's first breakout AR product. The $799 glasses represent the company's first consumer-ready AI eyewear with a built-in display and neural wristband technology.
Meta's core advertising business continues to surge, generating $50.08 billion in Q3 compared to Wall Street's $48.5 billion estimate. Daily active users across all Meta apps reached 3.54 billion, slightly ahead of the 3.5 billion consensus and showing the company's grip on global social networking remains strong.
