Meta’s stock drops on light revenue guidance, dwindling free cash flow

Meta shares dropped more than 5% in extended trading on Wednesday after the company issued a weaker-than-expected revenue forecast and took a big hit to its cash pile.

Here’s how the company did, compared with estimates from analysts polled by LSEG:

• Earnings per share: $6.18 vs. $7.22
• Revenue: $60.80 billion vs. $60.17 billion

Meta said it expects revenue this quarter of between $61 billion and $64 billion, or $62.5 billion at the middle of the range. Analysts were expecting guidance of $63.15 billion, according to LSEG. The company said that the guidance “assumes foreign currency is an approximately 1% headwind to year-over-year total revenue growth, based on current exchange rates.”

The company said that daily active people, or DAP, came in at 3.6 billion, trailing Wall Street estimates of 3.61 billion, according to StreetAccount.

For capital expenditures, Meta narrowed its guidance for the year to between $130 billion and $145 billion from a prior range of $125 billion to $145 billion. With Meta pouring money into artificial intelligencer infrastructure, Meta’s free cash flow dwindled to $784 million in the quarter from $8.55 billion a year earlier.

Last week, rival Alphabet reported that free cash flow turned negative for the first time on record due to the Internet giants hefty AI investments. However, unlike Alphabet and fellow hyperscalers Amazon and Microsoft, Meta doesn’t have a thriving cloud-computing business.

Meta shares are down 11% for the year as of Wednesday’s close, while the Nasdaq is up about 5% over that stretch.

On the earnings call, investors will be listening closely to what Meta CEO Mark Zuckerberg has to say about the company’s efforts to more directly monetize its various AI-related efforts. Earlier this month, Meta debuted the Muse Spark 1.1 model, which AI chief Alexandr Wang said represents the “strongest model for agentic and coding work yet” and at a cheaper price than offerings from OpenAI and Anthropic.

The company has been aggressively investing in a new AI strategy since hiring Wang in June 2025 in a deal that involved a $14.3 billion investment in Scale AI, Wang’s startup. Meanwhile, Meta is pouring money into AI infrastructure as it tries to keep pace with Alphabet, Amazon and Microsoft when it comes to building data centers and securing AI chips and systems needed to run models and workloads.

On Tuesday, Meta announced a venture with BlackRock to create a $14 billion data center project in El Paso, Texas, just a few weeks after disclosing that its big Hyperion data center project in rural Louisiana would cost over $50 billion. Earlier in July, Meta revealed plans to build a $9 billion data center in Alberta, Canada.

Meta said second-quarter total costs and expenses came in at $42.03 billion, representing an…