Meta shares drop 9% despite earnings beat as company takes one-time tax charge

Meta Shares fell 9% after the company reported third-quarter earnings that beat sales on Wednesday.

Here is the company’s performance compared to the forecasts of analysts participating in the LSEG survey:

• earnings per share: $7.25 vs $6.69 estimated
• Revenues: $51.24 billion versus an estimated $49.41 billion

Implementation of President Donald Trump’s One Big Beautiful Bill Act resulted in a one-time non-cash income tax cut of $15.93 billion, Meta said. The company said it expects this legislation to lead to a “significant reduction” in U.S. federal cash tax payments for the remainder of 2025 and future years.

The social media company’s third-quarter sales rose 26% year-over-year, marking the highest revenue increase since the first quarter of 2024.

The company said it expects fourth-quarter revenue to be in the range of $56 billion to $59 billion. The midpoint of that range comes in above what analysts expected, according to StreetAccount.

Meta raised the lower end of its total expenses this year by $2 billion and said expenses will be between $116 billion and $118 billion. This figure was previously between $114 billion and $118 billion.

The company also raised its 2025 target for capital spending, which will now be in the range of $70 billion to $72 billion. Its previous outlook was between $66 and $72 billion.

Meta’s Reality Labs hardware unit reported a loss of $4.4 billion on sales of $470 million in the third quarter.

The company said it saw 3.54 billion daily active people on its apps this quarter, above Wall Street’s expectation of 3.5 billion daily active people.

Meta’s ad sales were $50.08 billion in the third quarter, above Wall Street expectations of $48.5 billion.

The company has spent the year investing heavily in artificial intelligence and has undertaken a major overhaul of the organization spearheading these efforts following the release of its open-source Llama 4 software in April.

The social media firm said last Wednesday it would cut around 600 jobs at its Superintelligence Labs AI unit but would not harm the group’s flagship TBD Labs. A day earlier, Meta said it had struck a joint venture agreement with Blue Owl Capital in a $27 billion deal to help finance and build a massive data center in Richland Parish, Louisiana.

Meta said the number of employees was 78,450 as of September 30, representing an 8% increase compared to the previous year.

The company launched the Vibes AI-powered short video tool and social feed for Meta AI standalone app on September 25. Since Vibes’ launch, Meta AI downloads on both iOS and Android have increased 56% month-over-month, reaching 3.9 million total downloads as of Oct. 18, according to data provided to CNBC by mobile research firm Appfigures.

“Vibes is an example of a new type of content enabled by AI, and I think there are more opportunities to create many more new types of content in the future,” Meta CEO Mark Zuckerberg said during an earnings call.

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Correction: Analysts expected Meta revenue to be $49.41 billion. This number was misstated in a previous version of this story.