Meta posts record revenue amid $45 billion in legal costs
Meta reported record third-quarter revenue of $64.6 billion, beating expectations, while facing approximately $45 billion in legal costs and penalties this year. The company announced a stock split to fund AI spending and maintain executive control.
Meta reported Q3 revenue of $64.6 billion, up 26% year-over-year, beating Wall Street expectations. Ad prices rose 14% and impressions increased 10%, while headcount fell 15%. The company recorded a $10 billion legal charge related to social media addiction lawsuits and a separate $25 billion judgment from a New Mexico judge for deceiving users about data privacy practices, totaling roughly $45 billion in legal costs and penalties this year. Meta announced a two-for-one stock split creating new Class C shares to fund AI spending and maintain Mark Zuckerberg's control, including a commitment to stay in California to address a proposed billionaire wealth tax. Q3 CapEx was $35 billion, or 54% of revenue, causing year-to-date free cash flow to fall from $30 billion to $11 billion. Joel Kaplan, head of global policy and a former George W. Bush advisor, is leaving the company next year after more than 15 years, with Dina Powell taking his place. Kaplan helped repair Meta's relationship with the Trump administration. Kara Swisher and Scott Galloway view Meta's earnings as remarkable evidence of AI-driven efficiency, noting that fewer people are generating more revenue, while acknowledging the growing financial impact of legal liabilities related to teen harm.