Meta stock rises after hours as revenue jumps 26% despite legal charge
Representative image: LoboStudioHamburg / Pixabay
Meta's Q3 2026 revenue rose 26% to $64.6 billion on October 21, beating estimates; a $9.89 billion youth-litigation charge cut profit, but shares rose after hours.
What Happened
Meta Platforms, the owner of Facebook, Instagram and WhatsApp, reported third-quarter 2026 revenue of $64.6 billion on Wednesday, October 21, 2026, up 26% from a year earlier and above analysts' forecast of about $63.3 billion. Profit was cut sharply by a $9.89 billion legal charge linked to an agreement in the youth mental health litigation in the United States, bringing net income to $9.9 billion, or $3.83 a share. Meta stock rose in after-hours trading, with reported gains ranging from about 3% to 5%.
Key Facts
- Revenue: $64.6 billion for July to September 2026, up 26% year on year; advertising revenue was about $63.06 billion.
- Ads: ad impressions rose 10% and the average price per ad rose 14%, the company said.
- Legal charge: $9.89 billion, tied to an August agreement with 52 US state attorneys general that provides for payments of up to about $18.59 billion.
- Profit: net income of $9.9 billion, or $3.83 a share; excluding the charge, earnings would have been $7.40 a share, according to the company.
- Operating income: about $13 billion, down 37%, with the operating margin falling to 20% from 40%.
- Spending: capital expenditure of $34.9 billion in the quarter, against $19.4 billion a year earlier; free cash flow was negative at about $2.1 billion.
- Guidance: fourth-quarter revenue of $73 billion to $76 billion; 2026 capital spending of $135 billion to $145 billion, narrowed from $130 billion to $145 billion.
- Shares: the board approved a new class of non-voting Class C common stock, according to the release.
Why It Matters
Meta's core advertising business is growing fast. A 26% rise in revenue at a company of this size is unusual, and it came from both more ads shown and higher prices for each ad, a sign that advertisers are getting results from its targeting tools, which increasingly use artificial intelligence. That is why the share price rose despite the fall in reported profit.
The legal charge is the other side of the quarter. The agreement with state attorneys general relates to claims about the effects of Meta's platforms on young people's mental health. Besides payments, it includes measures such as banning or blocking certain features for users under 16, according to reports of the terms. Meta's chief financial officer, Susan Li, said several more youth-related trials are scheduled in the United States in the coming months, so legal risk has not gone away.
The third theme is spending on AI. Meta spent $34.9 billion on data centres and equipment in one quarter, almost double a year earlier, and expects to spend up to $145 billion this year. That spending pushed free cash flow below zero for the quarter. Investors are accepting it for now because advertising is growing, but they will watch whether returns from AI, including its Muse models and assistant, justify the cost.
For Indian readers, the results matter because Meta's apps are widely used in India for messaging, social media and small-business marketing, and changes in its ad pricing and policies affect Indian advertisers and creators. This report is not investment advice.
| Measure | Q3 2026 | Q3 2025 |
|---|---|---|
| Revenue | $64.6 billion | about $51.3 billion |
| Operating margin | 20% | 40% |
| Capital expenditure | $34.9 billion | $19.4 billion |
Impact
Short-term: Meta shares are set to open higher after the results, while analysts focus on the legal costs and the negative free cash flow.
Long-term: The size of AI spending and the outcome of the youth-safety trials will shape Meta's profits and share price. The new non-voting share class may also affect how future share issues and employee pay are structured.
Who is affected: Meta shareholders, advertisers and creators who use its platforms, users under 16 affected by the agreed feature limits, and rival technology companies competing in AI and digital advertising.
Key Takeaway
Meta's revenue rose 26% to $64.6 billion in the third quarter of 2026, beating estimates, but a $9.89 billion youth-litigation charge and heavy AI spending cut profit, and its shares still rose after hours.
Questions and Answers
What were Meta's Q3 2026 earnings?
Meta reported revenue of $64.6 billion, up 26%, and net income of $9.9 billion, or $3.83 a share, on October 21, 2026. Excluding a $9.89 billion legal charge, earnings would have been $7.40 a share.
Why did Meta stock rise after earnings?
Revenue beat forecasts and advertising grew strongly, with ad prices up 14% and impressions up 10%. Investors looked past the one-time legal charge, and shares rose about 3% to 5% in after-hours trading, according to market reports.
What is Meta's $9.89 billion legal charge for?
It relates to an August 2026 agreement with 52 US state attorneys general in litigation over young people's mental health, which provides for payments of up to about $18.59 billion and limits on some features for users under 16.
How much is Meta spending on AI in 2026?
Meta expects 2026 capital expenditure of $135 billion to $145 billion, mostly on data centres and computing for AI. It spent $34.9 billion in the third quarter alone.
Disclaimer: Prepared by the Peepals newsroom from publicly available sources with AI assistance. Information is accurate to the best of our knowledge at the time of publication and may change. Images may be representative. Not professional advice. Report an error via our contact page.
Sourced and fact-checked by the Peepals Global Editorial Team
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