Meta Just Burned Cash for the First Time Since Its IPO
For the first time since going public, Meta's AI spending outpaced every dollar it generated from operations, and the company still has no number for what comes next year.
Meta Platforms (NASDAQ:META | META Price Prediction) took in $32.79 billion of operating cash in the third quarter. It spent $34.91 billion on capital expenditures, including finance-lease principal. In the report released after the close on October 21, 2026, free cash flow came to negative $2.12 billion. That makes it the first negative free cash flow quarter since 2012, its IPO year.
The stock still closed at $697.52, up 0.47%. By 7:59 PM ET, it had risen 2.16% to $712.61 in after-hours trading, which keeps it well inside a 52-week range of $520.26 to $779.82. The open question is whether revenue can grow faster than the AI build-out before borrowing becomes the main way Meta pays for it.
How a Record Spending Quarter Tipped Into the Red
Purchases of property and equipment came to $33.94 billion, the most in Meta’s data going back to 2011. Another $964 million went to principal on finance leases. These are long-term rental contracts for data centers and servers that work like having the asset, so Meta considers those payments as capital spending.
Even without the leases, operating cash flow minus property purchases was still negative $1.16 billion. The last shortfalls on that basis came in the first half of 2012. In Q2 2012, Facebook brought in about $242 million of operating cash and spent $413 million on capex.
Spending also climbed quickly through the year. Capex was $19.4 billion a year earlier and $31 billion in Q2. Q2 free cash flow had already fallen 91% to $784 million, the lowest since late 2022. Free cash flow for the first nine months was still positive at $11.05 billion, down from $29.51 billion in the same period of 2025.
Debt Has Caught Up With Cash
CFO Susan Li laid out the balance sheet on the call: “Free cash flow was negative $2.1 billion. We ended the quarter with $82.4 billion in cash and marketable securities and $83.7 billion in debt.”
Long-term debt rose to $80.92 billion from $58.74 billion at December 31, 2025. Meta bought back no stock in the quarter, compared with $3.33 billion a year earlier. It still paid $1.36 billion in dividends, so when capex uses up the cash, buybacks are the first shareholder return to go.
Ad Growth Still Funds Most of the Build-Out
Revenue rose 26% to $64.60 billion, ahead of the roughly $63.3 billion analysts expected. Ad prices rose 14%, and impressions rose 10%.
Operating margin fell to 20% from 40%. Most of that drop came from a $9.89 billion charge linked to the August 2026 agreement with 52 state attorneys general over teen mental health. Diluted EPS was $3.83, or $7.40 without the charge.
Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOGL) also spent more on capex than they took in from operations from April to June 2026, and Alphabet reported negative free cash flow for the quarter. That shows real demand, but it also means none of these three AI spenders is covering its AI spending from current cash.
Meta Has Not Yet Put a Number on 2027
Meta narrowed its 2026 capex range to $135 billion to $145 billion from $130 billion to $145 billion and forecast Q4 revenue to $73 billion to $76 billion. Li said Meta is “quite early in developing our budget and capacity plans for next year.” Zuckerberg added: “It’s going to be very important to get the math on all of this to work out.”
Operating cash flow still paid for almost all of a record capex quarter, and the stock trades at about 25 times earnings. Debt now roughly matches cash and buybacks have ended, but that cost is acceptable as long as revenue keeps up with spending. The test comes with the Q4 2026 report, expected in late January 2027. A second negative free cash flow quarter, or revenue below the $73 billion low end of guidance, would weaken the bullish thesis.
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Omor Ibne Ehsan is a writer at 24/7 Wall St. He is a self-taught investor with a focus on growth, cyclical, and dividend equities that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as penny stocks.
