Meta Delivers Another Blowout Earnings Report. Here's What Investors Need To Know

Meta reached an agreement with CEO Mark Zuckerberg to stay in California for 8 years, avoiding potential tax-related share sales. The deal includes a new Class C share structure, allowing Zuckerberg to sell portions of his shares while maintaining voting control. Meta cited Zuckerberg's leadership as crucial amid AI competition. California's Proposition 40 could impose a 5% tax on assets over $1 billion, potentially affecting Zuckerberg's net worth.

A New Mexico judge ordered Meta to pay $25 billion for misleading Facebook users about data access, reducing the penalty from a potential $219 billion. The ruling stems from 43 million violations of state consumer protection law. Meta plans to appeal, arguing the state's approach makes it difficult to operate there.

Meta CEO Mark Zuckerberg threatened to leave California if a proposed wealth tax passes, according to an SEC filing. The tax would impose a 5% levy on billionaires' assets. Meta reported Q3 profit of $9.86B, up from $2.71B last year, with revenue rising 26.1% to $64.6B. Daily active users across Meta's platforms reached 3.64B, a 3% YoY increase. Zuckerberg highlighted AI advancements and strong business performance.

New Mexico has sued Meta Platforms twice, with a 2026 jury finding Meta exposed children to predators and ordering $375M in penalties. In a separate case, a 2026 jury found 43M violations of state law, with a judge ordering Meta to pay $25B. Meta plans to appeal both rulings.

Meta Platforms plans to issue non-voting Class C shares to existing shareholders, allowing it to raise capital without diluting voting power. The move comes as Q3 results show negative free cash flow of $2.12 billion, with capital spending outpacing operational cash generation. The company aims to use the new shares for funding, employee compensation, and potential acquisitions, particularly to support AI investments.

Meta Platforms reported Q3 2026 revenue of $64.6B, up 26% YoY, and raised its 2026 capex guidance to $135B-$145B, causing shares to rise 2% in extended trading. Tesla reported Q3 2026 adjusted EPS of $0.48 on revenue of $28.05B but cut its 2026 capex outlook to $20B, leading to a 3.3% drop in post-market trading. The contrasting capex guidance from both companies impacted stock futures, with Nasdaq-100 and S&P 500 futures both down.