Meta Platforms has shed nearly $400 billion in market value since late September. On Monday, the Facebook and Instagram owner launched a $35 billion stock sale to pay for its artificial intelligence (AI) build-out.
New shares spread Meta’s future profits across more owners, shrinking each existing holder’s slice. Yet Wall Street analysts still rate the stock a buy, with an average target about 1.4 times the current price.
Why Meta Is Selling Stock After a $400 Billion Drop
Meta spent $34.9 billion on data centers, chips, and other equipment in the third quarter. That pushed free cash flow, the cash left after those costs, to negative $2.12 billion, according to its results. A year earlier, it was positive $10.6 billion.
Long-term debt rose to $80.9 billion from $58.7 billion at the end of 2025. Meanwhile, the company bought back no shares in the quarter.
Operating margin, the share of revenue left as profit from operations, halved to 20%. However, a $9.89 billion legal charge drove much of that drop.
It covers a settlement with 52 US state attorneys general over teen mental health claims. Revenue still grew 26% to $64.6 billion.
Meta expects to spend $135 billion to $145 billion this year. Its SEC filing also outlines up to $60 billion in sales of new non-voting Class C shares from early 2027. Those shares raise money without diluting Mark Zuckerberg’s voting control.
Chipmakers NVIDIA, AMD, and Broadcom indicated non-binding interest in buying up to $5 billion of the new stock.
What Analysts Expect From Meta Stock Now
Meta traded near $624 as of this writing, almost 20% below its September peak, the usual threshold for a bear market.
Still, 38 of 44 analysts tracked by TipRanks rate it a buy, and none say sell. Their average target of $852.31 sits about 36% above the current price. The lowest target, $580, is already below it.
Zuckerberg defended the spending when Meta reported results.
“Our investments are paying off, the core business is strong, and we’re seeing velocity across the board.”
Microsoft and Alphabet report earnings on Wednesday, with their growing AI bills under the same scrutiny.
This season, investors have punished Big Tech for raising and cutting AI budgets alike. Meta now takes that no-win earnings test with negative free cash flow.
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