Meta’s stock plunges light revenue guidance, dwindling free cash flow

Meta shares plummeted almost 10% in extended trading on Wednesday after the company issued a weaker-than-expected revenue forecast and took a big hit to its cash pile.

Here’s how the company did, compared with estimates from analysts polled by LSEG:

• Earnings per share: $6.18 vs. $7.22
• Revenue: $60.80 billion vs. $60.17 billion

Meta said it expects revenue this quarter of between $61 billion and $64 billion, or $62.5 billion at the middle of the range. Analysts were expecting guidance of $63.15 billion, according to LSEG. The company said that the guidance “assumes foreign currency is an approximately 1% headwind to year-over-year total revenue growth, based on current exchange rates.”

Daily active people, or DAP, came in at 3.6 billion, trailing Wall Street estimates of 3.61 billion, according to StreetAccount. DAP measures the number of users of Meta’s family of apps.

For capital expenditures, Meta narrowed its guidance for the year to between $130 billion and $145 billion from a prior range of $125 billion to $145 billion. With Meta pouring money into artificial intelligence infrastructure, Meta’s free cash flow dwindled to $784 million in the quarter from $8.55 billion a year earlier.

Meta shares are down 11% for the year as of Wednesday’s close, while the Nasdaq is up about 5% over that stretch.

Investors are paying close attention to Meta’s efforts to more directly monetize its various AI-related efforts. Earlier this month, Meta debuted the Muse Spark 1.1 model, which AI chief Alexandr Wang said represents the “strongest model for agentic and coding work yet” and at a cheaper price than offerings from OpenAI and Anthropic.

The company has been aggressively investing in a new AI strategy since hiring Wang in June 2025 in a deal that involved a $14.3 billion investment in Scale AI, Wang’s startup.

“Overall, we expect that a significant portion of our compute is going to go towards training our models, growing our core business, and delivering personal agents and new products,” Meta CEO Mark Zuckerberg said on Wednesday’s earnings call. “But we also expect to grow a large business serving large customers as well.”

Last week, rival Alphabet reported that free cash flow turned negative for the first time on record due to the Internet giant’s hefty AI spending. Unlike Alphabet and fellow hyperscalers Amazon and Microsoft, Meta doesn’t have a thriving cloud-computing business. That could be changing as Meta looks to lease out excess capacity to third parties.

“We’re getting a lot of offers for compute at a significant premium over what we paid for it,” Zuckerberg said on the call.

On Tuesday, Meta announced a venture with BlackRock to create a $14 billion data center project in El Paso, Texas, just a few weeks after disclosing that its big Hyperion data center project in rural Louisiana would cost over $50 billion. Earlier in July, Meta revealed plans to build a $9 billion data center in Alberta, Canada.

Meta said second-quarter total costs and expenses came in at $42.03 billion, representing an increase of 55% from a year ago. That figure includes $2.4 billion of charges related to legal proceedings and $1.18 billion of severance expenses in connection with the company’s layoffs that began in May.

Finance Chief Susan Li said on the call that, excluding those charges, operating income would have increased 9% year over year.

Net income for the period slid to $15.85 billion from $18.34 billion, or $7.14 per share, in the same quarter last year.

Meta’s Reality Labs unit generated $4.6 billion in second-quarter operating losses while bringing in $431 million in sales. Wall Street was expecting that unit, which develops virtual reality and related AI-powered wearable devices, to record a second-quarter loss of $5.07 billion on revenue of $423.4 million.

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