Meta’s shares fall despite earnings growth as the company takes a tax charge

Meta shares fell as much as 9% on Wednesday after the company reported third-quarter earnings that beat sales but also reported a $15.93 billion one-time tax charge.

Here’s how the company fared compared to estimates from analysts polled by LSEG:

• Earnings per share: $7.25 cor. versus the estimated $6.69
• revenues: $51.24 billion vs $49.41 billion forecast

Metta said the implementation of President Donald Trump’s One Big Beautiful Bill Act resulted in a one-time non-cash income tax levy. The company said it expects Trump’s law to result in a “significant reduction” in U.S. federal income tax payments through the end of 2025 and beyond.

The company’s third-quarter sales rose 26% year over year, its highest revenue growth since the first quarter of 2024.

Meta said it expects fourth-quarter revenue to be in the range of $56 billion to $59 billion. The midpoint of that range is above analysts’ expectations, according to StreetAccount.

The company raised the bottom end of its total spending for the year by $2 billion, saying spending would be between $116 billion and $118 billion. That figure was previously between $114 billion and $118 billion.

CEO Mark Zuckerberg said Meta is constantly demanding more computing power for its AI initiatives, leading to more costs for connected data centers and cloud services.

“That suggests that being able to make a significantly larger investment here is very likely to be a profitable thing over a period of time,” Zuckerberg added.

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

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

Reality Labs’ fourth-quarter revenue is expected to be lower than the same period in 2024, Meta CFO Susan Li said on a call with analysts. Li said that’s because the company hasn’t released any new VR headsets this year and because retailers who bought inventory of Meta’s previous headsets for the holiday shopping season did so in the third quarter.

“We still expect significant year-over-year growth in AI glasses revenue in Q4 as we benefit from strong demand for the latest products we introduced, but this is more than offset by the headwind to the Quest headset,” Li said.

In September, the company unveiled the $799 Meta Ray-Ban Display Glasseswhich are Meta’s first consumer-ready AI glasses with a built-in display and accompanying neural technology bracelet. Zuckerberg said the product is sold out and that demo slots are booked until the end of November.

“We’re going to have to invest in ramping up production and selling more of them,” he said.

The company said it saw 3.54 billion daily active people on its apps for the quarter, ahead of Wall Street expectations of 3.5 billion daily active people.

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

The company spent the year investing heavily in AI and undertook a major overhaul of the organization leading those efforts after the lukewarm debut of Llama 4 open source software in April.

Metta said last Wednesday that he would laid off about 600 workers into its AI division Superintelligence Labs, but left that group’s top-level TBD Labs unscathed. The day before, Meta said he had formed a joint venture agreement with Blue Owl Capital in a $27 billion deal to help finance and build a giant data center in Richland Parish, Louisiana.

Meta said the number of employees was 78,450 as of September 30, an increase of 8% year-on-year.

In September, the company added Vibes to its Meta AI app. This feature is a feed of AI-generated videos. Since the release of Vibes, downloads of Meta AI on both iOS and Android have increased 56% month over month to a total of 3.9 million downloads as of October 18, according to data provided to CNBC from mobile research firm Appfigures.

“Vibes is an example of a new type of AI-enabled content, and I think there’s more opportunity to build many more new types of content,” Zuckerberg said.

Correction: Analysts had expected Meta revenue to reach $49.41 billion. That number was misstated in an earlier version of this story.

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