Meta revenue rises 26% to $64.6 billion; shares fall about 6% as free cash flow turns negative

Meta Platforms reported third-quarter revenue of $64.60 billion on Wednesday 21 October, up 26% from a year earlier and above analysts’ estimates of about $63.4 billion, according to the company and figures cited by CNBC and the Associated Press.

Net income was $9.86 billion, or $3.83 a share, compared with $2.71 billion a year earlier. Meta said the quarter included a $9.89 billion charge related to its agreement with US state attorneys general over teen mental health litigation; excluding that charge, earnings would have been $7.40 a share. Capital expenditure was $34.91 billion and free cash flow was negative $2.12 billion. Headcount was 66,775, down 15% from a year earlier.

Meta said it now expects full-year capital spending of $135 billion to $145 billion, raising the bottom of the range from $130 billion, CNBC reported. “Our investments are paying off, the core business is strong,” chief executive Mark Zuckerberg said in the results statement.

The company also announced a new class of non-voting Class C common stock. In a filing, Meta disclosed an arrangement under which Zuckerberg would receive new shares that could be sold to pay a possible one-off California billionaire tax, and in return committed to remain resident where Meta is based for eight years, the Guardian reported. Californians vote on the proposal, Proposition 40, next month.

Meta shares fell about 6% on Thursday, and prices of its five-year credit default swaps reached record highs, according to CNBC.

See also: Earnings week: GM, Netflix, SpaceX, Tesla and Meta.