Meta reported third-quarter results after the close on Wednesday, October 21, and the headline number is not revenue. It is a negative $2.12 billion in free cash flow, paired with a plan to create a new class of non-voting stock.
What did Meta report for Q3 2026?
Revenue was $64.6 billion, up 26% year over year. Income from operations was $12.99 billion, down 37%, which puts the operating margin at 20%. Capital expenditures, including principal payments on finance leases, were $34.91 billion.
Growth is not the problem. Cost is. Revenue rose by a quarter while operating income fell by more than a third.
Why did the operating margin drop to 20%?
Part of it is a one-time hit. Meta booked a $9.89 billion legal charge tied to its August 2026 agreement with 52 U.S. state attorneys general over teen mental health and social media litigation. The agreement provides for payments of up to about $18.59 billion.
Strip out that charge and the margin is higher, but not back to where it was. The spending line, not the legal line, is what keeps the free cash flow negative.
How big is the AI spending now?
The company narrowed its 2026 capex guide to $135 billion to $145 billion, from $130 billion to $145 billion. The release gives no 2027 figure.
One quarter of $34.91 billion in capex, set against negative free cash flow of $2.12 billion, means the build outran the cash the business generated in the period. That is a first for a company that spent years returning cash.
What is the Class C stock dividend?
Per the company's Form 10-Q and 8-K as reported by outlets that read the full text, the board declared a one-time dividend of one share of non-voting Class C common stock for each outstanding Class A and Class B share, contingent on an amended certificate of incorporation taking effect. Meta says it expects the Class A price to reflect a two-for-one split after payment, and the dividend is treated as a stock split in the form of a stock dividend for accounting purposes. Record and payment dates are still to be set.
Meta says the new shares may be used for capital raising, employee compensation and acquisitions. The dividend does not change any shareholder's voting power.
Why does a non-voting class matter right now?
A company that spends more than it earns in cash needs funding sources. Selling stock normally dilutes control. A non-voting class lets Meta sell or grant shares without shrinking founder voting power.
That is the mechanism. Whether Meta ever uses it for a raise is a separate question, and the filing only says it may. But the timing, alongside negative free cash flow, is the part traders are reading.
What moved in after-hours trading?
Reports on the after-hours move were mixed. Several outlets had Meta up roughly 2% to 3% in extended trading, a gain that narrowed from a brief rise above 4%. Tesla's move was reported in opposite directions depending on the source, so treat after-hours prints as unsettled until the cash open.
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