What Has To Go Right For Meta Stock Now?

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The past month has been difficult for anyone holding Meta Platforms (META). The stock lost 17.4% from September 24 to October 23, while the S&P 500 slipped 1.0%. Meta’s business kept growing, though, with third-quarter revenue rising 26.1% from a year earlier. So what are you paying for Meta’s profit today, and how does that compare with the market?

What You Pay Today For Meta’s Profit

Meta stock trades at 21.8 times its earnings over the last twelve months, against 22.9 for the S&P 500. Investors receive much faster growth for that price. Meta’s revenue growth averaged 24.0% across its last three twelve-month periods, against 6.0% for the S&P 500.

Those twelve months also include a large legal bill. Meta booked a $9.9 billion charge in the third quarter related to the August 2026 multistate attorneys general agreement, and its operating margin fell to 20.1% from 40.1% a year earlier. Without that charge, operating income would have reached about $22.9 billion, above the $20.5 billion of a year earlier, so the rest of the business earned more, though on a thinner margin.

Will Meta’s AI Spending Pay Back?

It is too early to tell, because Meta is still building. Management expects 2026 capital expenditures of $135 billion to $145 billion. Third-quarter spending went toward servers, data centers, and network infrastructure. These outlays left Meta with negative free cash flow of $1.16 billion in the third quarter, down from positive $11.2 billion a year earlier. Management put the quarter at negative $2.1 billion on its own measure, and said it expects to keep investing aggressively beyond 2026.

The best case for owning the stock is Muse personal agents. Management said on the October 21 call that more than 10 million people in the US and Canada set one up within a month and a half. About 25% of them use it on any given day.

The case against the stock is what Muse costs. Management gave no figures for it. It said Muse requires substantial computing power to run and that total serving costs will rise, though it expects to make Muse more than 10 times more cost efficient over the next year. Meta also faces several youth-related trials scheduled in the United States in the coming months, and management said legal matters could significantly impact its results.

How Far Has Meta Stock Fallen In Past Shocks?

Meta stock fell 71% during the 2022 inflation shock and Fed tightening, against 24% for the S&P 500. During the 2025 US tariff shock, it fell 31%, while the S&P 500 fell 19%. A repeat would cost you in proportion to the share of your money you hold in Meta.

For that risk to be worth taking, the AI spending has to start returning cash. Meta is expected to report in January 2027. Management said the fourth-quarter call is typically when it shares guidance, so its 2027 spending plan and its free cash flow are the figures to watch.

Is Too Much Of Your Wealth Riding On One Stock?

A move like this makes Meta Platforms holders ask whether to add or step back. When one position grows into a large part of your wealth, a sharp fall can hurt your whole plan, and selling to spread the money out can bring a large tax bill. Our partner advisory firm offers a free strategy review of ways to protect a concentrated position and unwind it with less tax.

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