Meta Platforms(US:META) Rask Media·2025-11-03 02:22Core Viewpoint - Meta Platforms Inc experienced a 14% drop in share price due to rising costs and cautious guidance despite reporting strong revenue growth [1] Financial Performance - Revenue increased by 26% year-on-year to US$51.2 billion, surpassing the previous quarter's US$47.5 billion [2] - Advertising revenue growth was driven by a 14% rise in ad impressions and a 10% increase in ad pricing [2] - Total expenses rose by 32% to US$30.7 billion, with capital expenditure more than doubling to US$19.4 billion from US$9.2 billion a year earlier [3] Earnings and Guidance - A significant one-off tax charge of US$15.9 billion impacted reported earnings per share, which fell to US$1.05, below expectations of around US$6.70 [3] - Adjusted EPS, excluding the tax charge, would have been US$7.25, exceeding expectations [3] - Management projected fourth-quarter revenue of US$56 billion to US$59 billion, indicating a slowdown in growth to about 19% [6] Capital Expenditure and Future Outlook - Capital expenditure outlook for 2025 was raised to US$70 billion–US$72 billion, up from a prior range of US$66 billion–US$72 billion [4] - Most of the increased spending will fund AI infrastructure as part of a long-term vision for "personal superintelligence" [4] - CFO Susan Li warned that expenses in 2026 will rise significantly faster than in 2025 due to AI infrastructure and cloud costs [8] Business Segments - Reality Labs, focused on virtual and augmented reality, generated only US$470 million in quarterly revenue but incurred an operating loss of US$4.4 billion [7] - Revenue from Reality Labs is expected to decline year-over-year in the fourth quarter due to product timing issues [7] Financial Position - Meta generated US$10.6 billion in free cash flow last quarter and had US$44.5 billion in cash and marketable securities as of September [12] - The company is positioned to continue investing in AI while also returning capital to shareholders through buybacks and dividends [12] Market Sentiment and Investment Considerations - The recent sell-off is perceived as more about spending optics than fundamental issues, with advertising revenue remaining resilient [13] - Despite the high level of investment and execution risks, the long-term potential of Meta is acknowledged, though a more cautious approach to entry points is suggested [14]