Meta Platforms Stock: Ongoing Decline This Week, Dropping by 12.19%
Meta Platforms stock closed at $648.35 on October 31, marking a 2.72% decrease from the previous session. This slight decline follows a dramatic 11% drop the day before, after the release of mixed quarterly results. Over the course of the week, the social media giant's stock has shown a largely negative performance, weighed down by the prospects of massive spending on artificial intelligence.
Trading Volume and Market Concerns
Trading volume for Meta reached 54.9 million shares on Thursday, accounting for 2.19% of its market capitalization. This high level of trading reflects the ongoing market concerns regarding the company's strategic directions. The session on Wednesday, October 30, had already turned red after the close, when Meta announced its third-quarter results. The revenue of $51.2 billion, up 26% year-over-year and exceeding market expectations, was overshadowed by the net profit situation. Net profit plummeted to $2.1 billion, a fivefold decrease from the previous year, due to an exceptional tax charge of nearly $16 billion in the United States. Beyond this one-time tax impact, investors were particularly concerned by the announcement of accelerated investments. Meta has increased its spending forecast for the entirety of 2025 to between $70 and $72 billion, approximately 75% more than in 2024. The upward trajectory is expected to continue next year, with an additional estimated expenditure of $30 billion. These massive expenditures aim to catch up in terms of artificial intelligence capabilities. Concurrently, Meta issued a record $30 billion bond on Thursday, divided into six tranches, to fund these general needs as well as its investment strategy.
Weekly Performance and Market Reaction
Over the week ending Thursday, October 31, Meta's stock declined by 12.19%, reflecting the extent of concerns raised by this strategic orientation. This performance contrasts sharply with that of the S&P 500, which advanced by 0.36% on Thursday and has shown an increase of 18.33% over twelve months. Meta itself had advanced by 14.23% over the same twelve-month period, thus remaining behind its benchmark index. The current tension focuses on short- to medium-term profitability. Despite robust revenue growth of 26% and a 10% increase in the average price of advertisements in the third quarter, the operating margin contracted to 40% from 43% a year earlier. This margin compression is due to a 32% increase in operating costs, directly related to investments in AI infrastructure. The management has warned that this downward margin trend will continue into 2026. The market is adjusting its expectations: analysts have lowered their earnings per share forecasts to $23.10 for 2025 and $30.10 for 2026, reflecting this uncertainty about Meta's ability to quickly monetize its investments. The 2.72% decline recorded on Thursday suggests a consolidation after the previous day's strong pressures, but concerns remain about the relevance of this aggressive investment strategy in a context of slowing margin growth.
