Meta Platforms falls 7.0% after earnings and legal charge cloud results

What happened

Meta Platforms (META) fell 7.0% on October 22, 2026, after the company reported quarterly results that included a $9.89 billion legal charge and warned of much higher AI infrastructure spending that dented free cash flow. The stock opened 3.0% below the previous close and closed at $648.85 on the session. News outlets including Reuters and CNBC reported the earnings details and the board actions that accompanied the release; the earnings report was the direct cause of the move.

How big was the move

The decline outpaced the broader market: the S&P 500 fell 1.2% that day, while the Communication Services sector median rose 0.7%, making Meta’s drop 7.6 percentage points worse than its sector. Trading volume ran at 2.1 times its 20-day average and the session’s change measured 2.3 times a typical daily move for this stock. Over the last five sessions the stock fell 11.9%, compared with the S&P 500’s five-session decline of 1.0%.

The technical picture

Technically, the stock sits 10.3% below its 20-day moving average and 2.1% below its 50-day moving average, while remaining 2.6% above its 200-day moving average. The 50-day average is above the 200-day average, a sign of an established uptrend, and the stock has spent 32 consecutive trading days above the 200-day average. The Relative Strength Index (14 days) is 37, inside a neutral range. The share price stands 16.8% below its 52-week high, and 60-day annualized volatility is 48%, higher than 71% of its own readings over five years.

Fundamentals and valuation

For the four quarters through September 30, 2026, revenue was $241.61 billion, a year-over-year increase that grew 27.5%. Diluted earnings per share for that period were $29.32, with earnings per share growth from a year earlier that rose 29.5%. Gross margin was 81.0% versus 82.0% a year earlier, while operating margin narrowed to 32.9% from 43.2% a year earlier. Free-cash-flow margin was 11.9% and return on invested capital was 17.1%. The balance sheet shows net debt of 0.9 times EBITDA.

On valuation, the stock trades at 22.1 times trailing earnings and 21.1 times expected earnings, with a free-cash-flow yield of 1.6%. Its price-to-earnings reading is lower than 71% of its own readings over the past five years; the five-year median is 25.4 times earnings. Those metrics highlight a tension for investors: strong profitability and high return on capital, but a premium valuation by historical standards and limited free-cash-flow yield relative to peers.

Earnings and analyst expectations

Meta reported on October 21, 2026, adjusted earnings per share of $7.40 against $6.54 expected, 13.1% above estimates, according to the company’s release. That upside did not offset the impact of the $9.89 billion legal charge and a warning about elevated capital spending tied to AI infrastructure. The company has beaten estimates in one consecutive quarter and its average surprise over the last four reports was 15.8% above estimates. Typical two-day reactions after recent reports have seen the stock fell 0.4%.

Analysts remain generally positive: 69 cover the stock with a consensus price target of $803.62, 23.9% above the closing price, and 81% rate the stock Buy or Strong Buy. The next report date is October 28, 2026.

What to watch

• October 28, 2026: Next scheduled report.
• The company’s stated higher AI infrastructure spending and elevated capital expenditures, which pushed free cash flow negative for the quarter (reported by Reuters and CNBC).
• The board-authorized 2-for-1 stock split and creation of a new class of non-voting Class C common shares (reported by Barrons and Benzinga).
• The $9.89 billion legal charge included in GAAP results and the related litigation coverage (reported by CNBC and Barrons).
• Trading volume at 2.1 times its 20-day average and the stock’s 32 consecutive trading days above the 200-day average.