Why Meta Platforms Stock Fell 12% in October

Core Viewpoint - Meta Platforms is experiencing increased spending, which has raised concerns among investors regarding potential risks associated with aggressive capital expenditures planned for the upcoming year [2][6]. Financial Performance - Meta reported a strong third-quarter earnings performance with a 26% year-over-year revenue growth, reaching $51.2 billion, surpassing estimates of $49.4 billion [5]. - The earnings per share, excluding a one-time charge related to deferred tax asset valuation, would have increased from $6.20 to $7.25, exceeding the consensus estimate of $6.71 [6]. Market Reaction - Despite strong adjusted earnings results, Meta's stock fell by 11.4% following the earnings report due to concerns over significantly larger capital expenditure growth anticipated for 2026 and faster expense growth next year [6][7]. - The stock finished the month down 12% after an initial recovery earlier in October [2]. Strategic Outlook - CEO Mark Zuckerberg emphasized the importance of investing in AI capabilities, indicating that the company is entering another cycle of increased capital expenditures to achieve superintelligence [8]. - While the increased spending may not guarantee immediate profits, Meta's advertising business continues to perform exceptionally well, suggesting a long-term positive outlook for the stock [9].