Meta's Q3 revenue exceeds expectations; stock rises 3-4% after earnings.

Huo Xing Finance reports that on October 22, Meta’s third-quarter revenue surged 26% year-over-year to $64.6 billion, exceeding market expectations; adjusted earnings per share (excluding one-time legal expenses) also significantly surpassed estimates. Following the earnings release, the stock rose approximately 3% to 4% in after-hours trading. Specifically, advertising revenue increased 26% year-over-year, ad impressions rose 10%, average ad prices climbed 14%, and daily active users across family apps reached 3.64 billion. GAAP EPS was $3.83, primarily impacted by a one-time legal settlement expense of approximately $9.89 billion related to resolutions with multiple U.S. state attorneys general over lawsuits concerning teen mental health and social media; excluding this charge, adjusted EPS was approximately $7.40. The company provided a fourth-quarter revenue guidance range of $73 billion to $76 billion, with the midpoint above market consensus. Full-year capital expenditure guidance was narrowed to $135 billion to $145 billion. Reality Labs revenue fell short of expectations, posting an operating loss of approximately $4.1 billion; the company expects the segment’s full-year loss to narrow to $18 billion to $19 billion, with further reductions projected to around $15 billion by 2027. Pivotal Research’s Jeffrey Wlodarczak raised his price target from $930 to $960 following the earnings report, citing stronger-than-expected revenue and capital spending performance, and highlighting positive usage data for Muse: over a quarter of Muse users made purchases through the agent, with an average purchase amount exceeding $200. Jefferies’ Brent Thill noted that the fourth-quarter guidance “leaves room for upside.” Meanwhile, BMO Capital’s Brian Pitz maintained a Hold rating and a $580 price target, acknowledging early momentum for Muse and progress in AI products but expressing concern over the visibility of returns on high capital expenditures in 2026–2027 and cost trajectories. Wall Street overall maintains a consensus “Strong Buy” rating for Meta, with an average price target of approximately $820, implying about 17% upside potential. The market generally believes that a robust advertising engine—powered by AI recommendation systems and generative AI tools—is funding large-scale investments in AI infrastructure, while Muse, as an early attempt at personal superintelligence, has demonstrated commercial potential—including in shopping and potential subscription models. Although free cash flow has turned negative due to high capital spending and reported profits were impacted by legal expenses, investors are currently more willing to pay for growth and the AI narrative than to overemphasize short-term cost pressures.