Meta share price: Stock slumps 7.5% despite upbeat Q3 results; why is Facebook parent falling?

Shares of Meta Platforms plunged 7.5% in Thursday’s trade on October 22, to reach $644.30 apiece as investors worried about the social media giant’s aggressive bet on artificial intelligence (AI), overshadowing better-than-expected September-quarter results. During its quarterly earnings report on Wednesday, the parent company of Facebook and Instagram raised its capital spending plans for the year and announced a new class of non-voting shares that could ultimately be used to help fund acquisitions and other expenses. Meta said it expects full-year capital expenditure (capex) to range from $135 billion to $145 billion, raising the lower end of its previous forecast of $130 billion to $145 billion.

The spending will support the company’s sweeping plan to put its Muse AI agent at the heart of its AI strategy and turn a technology that has gained traction largely among businesses automating coding into a consumer-focused revenue generator. The moves underscore Meta’s confidence that its already substantial AI investments are beginning to pay off. After struggling to convince investors to accept its ballooning costs, Meta has made progress with its technology in recent months, particularly through its new AI agent, Muse.

CEO Mark Zuckerberg cited that progress as a reason to continue investing aggressively. Over the past year and a half, Zuckerberg has refocused the company’s efforts on advancing its position in the AI race. The push has involved committing hundreds of billions of dollars to build the infrastructure needed to support its models and overhauling its AI unit under the leadership of Alexandr Wang.

To help fund the push, Meta will create a new class of non-voting shares called Class C. The company said it could raise hundreds of billions of dollars over several years to finance AI investments, acquisitions, and employee compensation, with issuances potentially beginning as early as autumn 2026. Meta’s new class of shares will be distributed to existing investors through a stock dividend.

Shareholders will receive one new share for each existing share held, effectively creating a two-for-one stock split, the company said. Trading in the new shares is expected to begin in January. The new stock will also serve as a tool to support Meta’s expansion.

The company said it could be used for capital raising, employee compensation, and potential acquisitions.Meta’s September-quarter earnings beat estimatesMeta reported third-quarter revenue of $64.6 billion, beating analysts’ estimates of $63.37 billion. Revenue growth was supported by a 10% increase in ad impressions and a 14% rise in the average price per advertisement, with the company citing AI initiatives, including Muse and Muse Wonder, as helping drive engagement.Earnings per share came in at $3.83, although it was unclear whether the figure was directly comparable with Wall Street’s expectation of $5.75 per share.During the company’s third-quarter earnings call, Zuckerberg said Meta’s family of apps had reached 3.64 billion daily users. He also said Threads had surpassed Elon Musk’s X in monthly active users.(With inputs from Bloomberg, Reuters)Disclaimer: We advise investors to check with certified experts before making any investment decisions.