Meta Stock Drops Nearly 8% After Missing Earnings Despite Revenue Beat

Meta Platforms reported second quarter results that missed earnings per share expectations but beat revenue forecasts, sending shares tumbling nearly 8% in after-hours trading Wednesday.

Earnings Miss Driven by One-Time Charges

The company posted earnings per share of $6.18 on revenue of $60.8 billion, falling short of analyst expectations for EPS near $7.14 despite revenue coming in slightly above projections. The shortfall was largely attributed to $2.4 billion in legal contingency costs and a $1.2 billion severance charge, without which Meta would have exceeded earnings expectations. Advertising revenue reached $59.3 billion, slightly ahead of forecasts.

Cautious Outlook and Higher Spending Plans

For the third quarter, Meta projected revenue between $61 billion and $64 billion, falling short of Wall Street’s expected midpoint. At the same time, the company raised the lower end of its 2026 capital expenditure guidance, now projecting spending between $135 billion and $145 billion.

New Data Center Partnership and AI Strategy

Earlier in the week, Meta announced a partnership with BlackRock to build a $14 billion, one-gigawatt data center in Texas, with BlackRock holding the majority stake. Meta’s CEO has also suggested the company may explore leasing out data center capacity to outside customers, potentially following a model similar to arrangements other tech firms have used to rent AI computing power. Meta additionally launched a new AI model this month with aggressive pricing well below rates charged by competing AI labs, a move that could help it attract price-sensitive developers.