Key facts
- Meta plans to appeal a $25 billion penalty in a data-privacy case.
- The company expects annual capital expenditure between $135 billion and $145 billion for AI plans.
- Meta reported a free cash flow deficit of $2.12 billion in the third quarter.
- A new class of non-voting Class C shares is planned to aid acquisitions and compensation.
- At least 13 brokerages raised their price targets on Meta stock.
Meta Platforms shares declined about 3% in premarket trading on Thursday, as investors balanced the rapid growth of its AI agent business against the significant costs associated with its AI expansion. The company's stock, which has gained over 5% this year, risked erasing approximately $50 billion in market value. This reaction followed Meta's stronger-than-expected quarterly revenue and sales forecast, alongside the rapid adoption of its new AI app, Muse. However, the positive financial outlook was overshadowed by a $25 billion penalty ordered by a New Mexico judge in a data-privacy case linked to Cambridge Analytica, a ruling Meta intends to appeal. The company is heavily investing in its AI initiatives, projecting annual capital expenditures between $135 billion and $145 billion, and reported a $2.12 billion free cash flow deficit in the third quarter, a reversal from positive cash flow a year prior. Deutsche Bank analyst Benjamin Black noted that Meta's AI investments are improving advertising performance and engagement, creating a positive outlook for the stock.