Why Is Meta Stock Down Today?

Meta shares are down 6.708% in Friday's session, extending the fall that began with second-quarter results. Revenue grew 28%. The stock still dropped as much as 10.4%, and the reason is on the cash-flow line rather than the revenue line: free cash flow fell 90% to $784 million while capital spending nearly doubled.

The number that moved the stock

Free cash flow is the cash left over after a company pays for the buildings, servers and equipment it buys. It is what funds buybacks, dividends and acquisitions without borrowing. Meta's fell 90% to $784 million in the quarter.

The cause is not weak trading. Revenue rose 28% to $60.8 billion. The cause is that capital expenditure reached $31.1 billion in the quarter, close to double the amount a year earlier, as Meta builds AI infrastructure. Money spent on data centres is money that does not appear in free cash flow, even when the underlying advertising business is performing.

Profitability also slipped. Diluted earnings per share of $6.18 fell 13% and came in below the $7.22 that had been forecast.

The guidance that confirmed it

Meta narrowed full-year capital-expenditure guidance to a range of $130 billion to $145 billion, lifting the bottom of a previously wider range. Narrowing upward removes the possibility that spending comes in at the lower end. For a market already uneasy about the size of the commitment, that is a firmer commitment rather than a softer one.

Why the same spending is read differently elsewhere

This is the informative contrast this week. Amazon also disclosed a very large increase in capital spending, and its shares rose. Microsoft described cloud demand exceeding its capacity, and its shares rose sharply. Meta raised its spending commitment and its shares fell.

The difference is not the spending. It is whether the revenue that spending is meant to produce is already visible in the accounts. Amazon showed AWS growing 37%; Microsoft showed Azure growth accelerating to 43%. Both can point at a line that customers are paying into today. Meta's AI spending supports its own products, so the return arrives indirectly and later, through engagement and advertising, rather than as a rentable service with its own revenue line. Investors are paying for visibility, and cloud providers can show it while Meta currently cannot.

What to watch next

Concrete items with dates attached: the next quarterly report and whether free cash flow recovers as spending moderates or stays compressed; the 10-Q filing for this quarter for the full cash-flow statement; any revision to the capital-expenditure range; and any formal disclosure about selling infrastructure capacity to third parties, which would turn this spending into a directly measurable revenue line rather than an internal cost.