Meta stock sinks 6% as AI spend pushes free cash flow negative

Meta CEO Mark Zuckerberg wears the Meta Ray-Ban Display glasses, as he delivers a speech presenting the new line of smart glasses, during the Meta Connect event at the company's headquarters in Menlo Park, California, U.S., Sept. 17, 2025.

Carlos Barria | Reuters

Meta shares slumped roughly 6% on Thursday as the social media giant showed negative free cash flow in its third-quarter earnings and raised the floor of its full-year capital expenditures.

The spread on the social media giant's five-year credit default swaps reached all-time highs on Thursday, a signal of growing credit concerns from investors as the company leans deeper into its artificial intelligence spending plans.

Meta said it expects its full-year capex to range from $135 billion to $145 billion, raising the bottom of the range from a previous $130 billion to $145 billion.

Free cash flow came in at a negative $2.12 billion during the quarter.

The company revealed Wednesday that it would create a new class of nonvoting Class C common stock during its earnings release, meant to maintain its "founder-led structure" and "provide Meta the ability to finance its growth."

Meta also said CEO Mark Zuckerberg could leave the state if the "California Wealth Tax" were to pass, as he "could become liable for a significant, multi-billion-dollar tax payment based on his ownership of stock in the Company," according to the SEC filing.

Zuckerberg was convinced to stay in California with the company's new stock plan, the filing noted.

Revenue for the social media giant jumped 26% in the third quarter from a year ago, coming in at $64.60 billion versus the $63.37 billion analysts expected. Earnings per share were reported at $3.83, though it wasn't clear if it was directly comparable to the $5.75 per share Wall Street was looking for.

—CNBC's Jonathan Vanian and Seema Mody contributed to this report.

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