Meta's new nonvoting shares create an overhang — and Wall Street wants it gone

RBC Capital raised its price target for Meta Platforms (META) to $800 from $770, citing strong Q3 results and AI-driven growth. The firm noted impressive gross profit margins and revenue growth, with AI expected to drive optimization through 2027. Meta's stock trades at a P/E ratio of 24.67, and several analysts have raised their price targets following the earnings report.

Tesla and Meta reported earnings, causing AI-related stocks to decline. Tesla's revenue was flat, but it generated $1.5B in free cash flow, while Meta's revenue rose 26%. Both companies' capital expenditure plans sparked investor concern about AI spending, affecting chipmakers like Nvidia, Micron, and AMD.

Meta (META) announced a new Class C non-voting stock to retain CEO Mark Zuckerberg in California and fund AI investments. The stock fell 6.5% on the news. The move aims to help Zuckerberg avoid potential wealth taxes while allowing Meta to raise capital without diluting voting power. The company plans to distribute Class C shares as a dividend and may issue more in the future for acquisitions and employee compensation.

A New Mexico judge ordered Meta Platforms to pay $25 billion for misleading users about privacy in the Cambridge Analytica case, exceeding a 2019 FTC fine. Meta is appealing. Shares rose 0.47% to $697.52. The penalty, tied to 43 million violations, goes to New Mexico schools. Meta's Q3 revenue was $64.60 billion, with $9.86 billion net income.

Meta reported its first negative free cash flow since 2012, with -$2.12B in Q3 2026 due to record capital expenditures. Revenue grew 26% to $64.60B, but operating margin fell to 20%. The company's debt rose to $80.92B, matching its cash reserves. Meta's stock rose 2.16% in after-hours trading. The company has not yet provided 2027 spending forecasts.

Meta was ordered to pay $25 billion by a New Mexico judge for deceiving users about data privacy, marking one of the largest penalties against a tech company. The ruling follows a 2021 lawsuit related to the Cambridge Analytica scandal, with a jury finding 43 million violations of state consumer protection laws. Meta also recently settled claims with 47 states for up to $17.1 billion.