Meta shares drop after-hours as capex guidance overshadows earnings beat

Meta Platforms Inc. ‘s shares fell more than 6% in after-hours trading today after the social networking company reported strong beats in revenue and earnings in its fiscal 2026 first quarter but raised its capital expenditure guidance for the year and disclosed a sequential decline in users.

For the quarter that ended on March 31, Meta reported adjusted earnings per share of $10.44, up from $6.43 per share in the same quarter of last year, on revenue of $56.31 billion, up 33%.

Both figures came in above the $6.65 per share and revenue of $55.32 billion expected by analysts, but the revenue figure was inflated by an $8.03 billion onetime tax benefit tied to U.S. Treasury Notice 2026-7. Excluding the benefit, EPS would have been $7.31 — still a solid beat, but not by quite as much.

Meta’s net income in the quarter jumped 61%, to $26.77 billion. Operating income rose 30%, to $22.87 billion, with operating margin holding flat at 41%. Free cash flow was $12.39 billion.

Family of Apps revenue, the Meta segment that includes Facebook, Instagram, Messenger and WhatsApp, rose 33% year-over-year, to $55.91 billion. Advertising revenue alone reached $55.02 billion. Reality Labs, the unit covering virtual and augmented reality hardware and software, posted $402 million in revenue and an operating loss of $4.03 billion, narrower than the $4.21 billion loss a year ago.

Ad impressions across the Family of Apps rose 19% year-over-year, while the average price per ad rose 12%.

One notable figure saw daily active people averaging 3.56 billion in March, up 4% year-over-year but down quarter-over-quarter. Meta blamed the sequential dip on internet disruptions in Iran and a restriction on access to WhatsApp in Russia.

Research and development spending jumped 46%, to $17.70 billion, the largest cost line increase, reflecting continued investment in artificial intelligence infrastructure and Meta Superintelligence Labs, the company’s recently formed AI research arm. Capital expenditures in the quarter alone reached $19.84 billion.

“We had a milestone quarter with strong momentum across our apps and the release of our first model from Meta Superintelligence Labs,” founder and Chief Executive Mark Zuckerberg said in the company’s earnings release. “We’re on track to deliver personal superintelligence to billions of people.”

For the second quarter, Meta said it expects revenue of $58 billion to $61 billion. The company kept its full-year expense outlook unchanged at $162 billion to $169 billion but lifted its 2026 capital expenditure range to $125 billion to $145 billion, up from the prior $115 billion to $135 billion. Meta attributed the increase to higher component pricing and additional data center costs to support future capacity.

Though Meta’s headline beats were strong, the capital expenditure revision spooked investors.

Investors had already grown nervous about the scale of the AI infrastructure buildout and the figures in the report confirmed that the bill continues to rise, with no clear ceiling and a CEO committing publicly to delivering “superintelligence to billions.” The user-growth dip, even if it was caused by geopolitical tensions, added to investor concern.

Meta also flagged ongoing legal exposure from youth-safety trials scheduled in the U.S. this year, warning the cases “may ultimately result in a material loss.”

Photo: Meta