Copyright indiatimes
Global Desk Meta Platforms Inc. stock dropped after Oppenheimer downgraded it from “Outperform” to “Perform” on Thursday. The investment firm said it’s worried about Meta’s massive spending on Artificial Intelligence (AI) projects. Even with the downgrade, Meta’s market cap is $1.89 trillion, and its stock is still near its 52-week high, up 37% in the last six months. Oppenheimer pointed out Meta’s heavy investment in “Superintelligence”, calling it risky because there’s no clear revenue opportunity yet, as per the report by Investing.com. They compared this to Meta’s earlier Metaverse spending in 2021–2022, which didn’t pay off as expected. InvestingPro data shows Meta’s debt is moderate, and it has enough cash flow to handle interest payments, which means it can still afford big projects. The downgrade also followed Meta’s fourth-quarter expense forecast, which came in 7% higher than expected, worrying analysts.Meta said its 2026 capital spending will be “notably larger” than 2025, and overall expenses will grow “significantly faster” than the 23% growth expected for 2025. On the bright side, Meta’s third-quarter ad revenue grew 25%, better than the 21% growth in Q2, and 4% above Oppenheimer’s estimates. But Oppenheimer said it’s confusing that Meta expects a 600 basis point slowdown in Q4, even after strong ad growth. Meta’s profit margins are around 82%, and its revenue hit $178.8 billion over the past 12 months. Oppenheimer also said investors will find it hard to justify Meta’s stock price until there’s clarity about 2027 performance. The firm noted that both Meta and Alphabet (Google) trade at the same 21x P/E multiple for 2027 estimates, but it believes Google’s Search may grow faster by 2026. Meta currently trades at a P/E ratio of 27.1, but its PEG ratio of 0.62 suggests it’s still reasonably valued for its growth rate, as stated by Investing.com. For more details, InvestingPro’s Research Report provides deeper insights into Meta’s valuation. Live EventsALSO READ: 90% of Americans miss this simple tax trick that can slash RMD pain — don’t be one of themEarnings results disappoint investorsMeta’s third-quarter 2025 earnings report showed a big mismatch between profit and expectations. The company reported an EPS (earnings per share) of $1.05, while analysts expected $6.68, a massive -84.28% surprise. However, Meta’s revenue was strong — it made $51.2 billion, beating the expected $49.36 billion, a 26% increase year over year. After the results, Goldman Sachs cut Meta’s price target from $870 to $815 but kept a “Buy” rating, calling it a “mixed quarter.”Goldman Sachs said Meta’s core business is strong, but the high spending cycle could hurt its stock in the future.Investor concerns after resultsYahoo Finance reported that Meta’s stock fell in after-hours trading after releasing Q3 results. Even though revenue beat expectations, Meta’s year-over-year earnings dropped sharply because of a $16 billion tax hit. This huge tax charge worried investors, as it made Meta’s profits look much lower than expected. Aaron Kessler, a senior internet analyst at Seaport Research Partners, said the one-time tax charge and heavy spending were the main reasons investors sold off the stock. Kessler also said investors are watching Meta’s AI and hardware business closely for future growth opportunities. FAQsQ1. Why did Meta’s stock fall after earnings?Meta’s stock fell because its profits missed expectations, it faced a $16 billion tax hit, and investors were worried about its heavy spending on AI projects.Q2. Why did Oppenheimer downgrade Meta stock?Oppenheimer downgraded Meta due to high AI investment costs and unclear future profits, similar to the company’s risky Metaverse spending earlier.Add as a Reliable and Trusted News Source Add Now! (You can now subscribe to our Economic Times WhatsApp channel) Read More News onMeta stockMeta earningsOppenheimer downgradeMeta AI investmentMeta revenueMeta profit missMeta stock fallMeta tax hitMeta Q3 results Meta valuationMeta stock downgrade (Catch all the US News, UK News, Canada News, International Breaking News Events, and Latest News Updates on The Economic Times.) Download The Economic Times News App to get Daily International News Updates....moreless (You can now subscribe to our Economic Times WhatsApp channel)Read More News onMeta stockMeta earningsOppenheimer downgradeMeta AI investmentMeta revenueMeta profit missMeta stock fallMeta tax hitMeta Q3 results Meta valuationMeta stock downgrade(Catch all the US News, UK News, Canada News, International Breaking News Events, and Latest News Updates on The Economic Times.) Download The Economic Times News App to get Daily International News Updates....moreless
