Meta Platforms saw its shares plunge more than 7 per cent in after-hours trading in New York, despite reporting strong third-quarter sales. The social media and technology giant, known for platforms like Facebook and Instagram, reported third-quarter sales of $US51.2 billion, surpassing analysts’ estimates of $US49.6 billion. Meta uses profits from its advertising business to develop artificial intelligence (AI) technologies.
According to the company, third-quarter net income was $US2.71 billion, which included a one-off, non-cash income tax charge of $US15.9 billion due to the implementation of the tax bill signed into law in July. Excluding this charge, Meta said its net income would have increased 19 per cent to $US18.6 billion. The company anticipates a significant reduction in US federal cash tax payments for 2025 and subsequent years due to the new law.
Despite the positive sales figures, Meta expects total expenses to significantly increase in 2026 and will continue to invest heavily in AI. While Meta maintains that its AI investments are currently beneficial, aiding in better ad and content targeting, a substantial slowdown in ad sales could diminish investor enthusiasm for CEO Mark Zuckerberg’s long-term AI vision. Investors are closely monitoring whether holiday-quarter sales can sufficiently offset some of this spending.