Meta's Shares Fall Over 8% Due to Weak Earnings and Guidance

Meta Platforms' shares fell more than 8% in premarket trading on Thursday after the company's second-quarter financial results disappointed investors.

The company's earnings per share (EPS) were $6.18, below analysts' forecast of $7.17. Despite this, revenue increased to $60.8 billion and exceeded the consensus of $60.19 billion.

Meta guided revenue of $61–64 billion for the third quarter, while analysts on average expected $63.24 billion.

In the second quarter, the company's total expenses increased 55% to $42.03 billion. This included $2.4 billion in legal expenses and $1.18 billion in compensation related to workforce reductions carried out in May.

According to analysts at Bank of America, the sharp decline in shares reflects investor concerns about Meta's investment strategy. However, in their view, a significant portion of the expenses are one-time and will not recur in 2027.

Despite the earnings decline, Meta's advertising business remained strong. The company's revenue grew 28% year-over-year, supported by a 14% increase in ad impressions and a 12% rise in average ad prices. Meanwhile, the number of Family Daily Active People increased to 3.60 billion.

Chief Executive Officer Mark Zuckerberg stated that artificial intelligence is already significantly enhancing the company's core business and supporting the development of new products and corporate capabilities.

Additionally, Meta spent $31.08 billion on expanding AI infrastructure, which resulted in free cash flow declining from $8.55 billion to $784 million.

The company also refined its 2026 capital expenditure forecast to $130–145 billion (the previous range was $125–145 billion) and raised the lower bound of full-year operating expenses to $165–169 billion.