Meta (META) Beats on Revenue, Splits Its Stock and Keeps Spending Big

Meta Platforms (META) gave investors three things Wednesday: a revenue beat, a stronger-than-expected outlook and a stock split with a catch. The shares rose about 2.5% in extended trading, according to CNBC's live coverage.

Third-quarter revenue was $64.6 billion, up 26% from a year ago and ahead of the $63.37 billion analysts expected. For the fourth quarter, Meta guided to $73 billion to $76 billion, with the midpoint above the $73.73 billion consensus.

Reported earnings were $3.83 a share. That figure took a hit from legal costs tied to Meta's teen mental health settlement, and Yahoo Finance noted that earnings would have been $7.40 without the charge. Investors will largely look through it.

The split is the headline structural change. Meta will distribute a new class of non-voting Class C shares to existing holders as a dividend, which works out to an effective 2-for-1 split. They begin trading in late January 2027.

Meta says the new class gives it room to finance its growth while keeping the founder-led model intact. In plain English: it can raise money for the AI buildout without diluting Mark Zuckerberg's control. He also committed to staying in California for eight years, a filing shows, as California's proposed wealth tax looms on the Nov. 3 ballot.

Beyond Muse, the core apps are still gaining ground. Instagram time spent per user hit an all-time high in the quarter, Facebook Reels did too, and time spent on Threads rose 20% from a year ago. Zuckerberg also claimed Threads has overtaken X in monthly active users.

The spending side didn't blink. Meta narrowed its 2026 capital expenditure forecast to $135 billion to $145 billion, lifting the bottom of the range from $130 billion. Analysts had been modeling about $138 billion.

Offsetting some of that, headcount fell 12% from the prior quarter to about 66,000 after summer layoffs. Reality Labs lost $4.13 billion on $443 million of sales, a smaller loss than the roughly $4.5 billion analysts expected. Management expects that operating loss to shrink to around $15 billion next year.

The story investors are paying attention to, though, is Muse, Meta's AI personal agent. Zuckerberg said more than 10 million people in the U.S. and Canada have set it up since launch, and roughly 25% use it on any given day. Shopping is the top use case, with an average purchase above $200.

"If compute efficiency continues to improve quickly for another few years, which we think is highly likely, then Muse will be highly profitable over multiple years." — Mark Zuckerberg, CEO, Meta

That's the pitch behind the capex. Zuckerberg expects Muse's compute cost efficiency to improve tenfold within a year, and says Muse revenue per user could eventually top that of Meta's existing apps. CNBC noted the launch helped Meta post its best month on Wall Street since 2022 in September.

For Meta holders, the setup is decent: advertising is growing at 26%, guidance is above the Street and the company is monetizing AI in its core apps. The split itself changes nothing about the value of a position, though the non-voting structure will matter to governance-minded investors.

The risks are real. Capex of up to $145 billion leaves little room for an ad slowdown, and Reality Labs is still burning billions. Legal exposure is also growing, including a $25 billion New Mexico order that Meta says it will fight on appeal.

Watch three things from here: how quickly Muse reaches users outside North America, whether the 10x compute-efficiency claim shows up in margins, and how Wall Street prices the Class C shares when they start trading in January.

Bottom line: Meta is still spending like the AI race is winner-take-all, and for now the ad business is covering the check.