Bank of America resets price target as Meta earnings send stock reeling

Core Insights - Meta reported Q3 earnings on October 29, highlighting a significant increase in revenue and a notable drop in net income due to a one-time tax charge [1][3][5] - CEO Mark Zuckerberg emphasized the growing usage of Meta AI, with over a billion monthly active users, and expressed excitement about future developments [1] - The launch of Meta's Ray-Ban glasses was successful, selling out in almost every store within 48 hours, indicating strong consumer interest [2][3] Financial Performance - Revenue for Q3 increased by 26% year over year, reaching $51.2 billion, surpassing Wall Street estimates of $49.6 billion [5][7] - Operating margin decreased to 40% from 43% in Q3 2024, while net income fell by 83% to $2.7 billion due to a one-time tax charge of $15.93 billion [5][6] - Diluted earnings per share (EPS) dropped to $1.05 from $6.03 in Q3 2024 [5] Future Outlook - Meta provided guidance for Q4 2025, projecting total revenue between $56 billion and $59 billion, which is above Wall Street's estimate of $57.4 billion [5][7] - The company anticipates a significant reduction in U.S. federal cash tax payments for 2025 and beyond due to the One Big Beautiful Bill Act [4] - Full year 2025 total expenses are expected to be in the range of $116 billion to $118 billion, with capital expenditures projected between $70 billion and $72 billion [5] Market Reaction - Following the earnings report, Meta's stock experienced a decline of 12%, trading near $660, reflecting investor concerns despite the revenue beat [6] - Bank of America analysts adjusted their estimates, increasing the revenue forecast for 2026 by 1% to $240 billion while lowering the EPS estimate by 10% to $28.86 [7][8]