Meta Just Sold $25 Billion of Stock. Buyers Asked for Five Times More.
Research Desk · October 28, 2026
Meta Platforms logo. Image via Wikimedia Commons.
- Meta Platforms (NASDAQ: META) grew third-quarter revenue 26% to $64.6 billion, beat the top of its own forecast, and guided to as much as $76 billion for the holiday quarter.
- The stock has dropped about 11% since that report as investors balked at a $135 billion to $145 billion AI spending plan, now funded in part by a $37.5 billion stock and preferred sale.
- The common stock sale drew orders roughly five times its size, and the shares now trade near 19 times forward earnings, while the average analyst target sits about 36% higher.
Today is a heavy day for anyone who owns big technology stocks. The Federal Reserve announces its rate decision this afternoon, and Alphabet and Microsoft are scheduled to report after the close.
But the most telling event of the week already happened. It came from the company that reported first.
On Monday, Meta Platforms (NASDAQ: META) launched its first large public stock sale in more than a decade. By Tuesday it had priced $25 billion of common stock at $625 a share, upsized from $22.5 billion, plus $12.5 billion of preferred stock paying 6.5%.
Bloomberg reported that orders for the common stock came in about five times the shares on offer. The preferred sale was also oversubscribed several times.
The stock itself went the other way. Meta closed Tuesday at $620.19, roughly 11% below where it stood before its earnings report and about 20% under its September high.
Why the Owner of Facebook Is Raising Money
The business is not short of customers. Meta's apps reached 3.64 billion people a day in September.
Advertisers showed 10% more ads than a year ago and paid 14% more for each one. That pricing power is the signature of a company whose product people actually use.
The issue is the size of the building project. Meta now plans to spend $135 billion to $145 billion this year on data centers, chips and networking, nearly double last year's $72 billion.
Think of a restaurant owner with a full dining room every night. The kitchen is profitable, but he wants to build a second kitchen three times the size before a rival does.
He could drain his savings, borrow heavily, or bring in partners who buy a share of the business. Meta is now doing a bit of all three.
The Quarter Behind the Selloff
The numbers that set this up were strong on the revenue line. Third-quarter sales of $64.6 billion landed above the top of Meta's own $61 billion to $64 billion range.
That has become a habit. Revenue has topped the high end of the company's forecast in 7 of the last 10 quarters.
Reported earnings were $3.83 a share, weighed down by a $9.89 billion charge for its settlement with 52 state attorneys general over teen safety. Excluding that charge, earnings were $7.40 a share, well ahead of what analysts expected.
Management guided fourth-quarter revenue to $73 billion to $76 billion. At the midpoint, that is growth of roughly 24%, for a company already generating more than $240 billion a year in sales.
The One Number That Spooked Investors
Here is the blemish, and it is a real one. In the third quarter, Meta spent $34.91 billion on its build, more than the $32.79 billion of cash its operations brought in.
Free cash flow came in at minus $2.12 billion. A year earlier it was a positive $10.63 billion.
Meta has not bought back a single share in 2026, after spending more than $26 billion on buybacks in the first nine months of last year. Its cash pile of $82.45 billion now roughly matches its $80.92 billion of long-term debt.
For a retirement-minded holder, that is the shift worth understanding. Meta used to return cash to owners. For now, it is asking owners and new investors for cash instead.
What Changes for Existing Shareholders
Two moves are coming. The first is a new non-voting Class C share, which every holder will receive one-for-one shortly after the change takes effect on January 19, 2027.
In practice it works like a two-for-one stock split. A holder of 100 shares would own 100 Class A and 100 Class C shares, each worth about half as much, so the total value is unchanged.
The second is dilution. Beyond this week's $37.5 billion, Meta plans an at-the-market program of up to $60 billion in Class C stock once that class begins trading. More shares means each existing share owns a slightly smaller slice of future profits.
Some notable buyers are lining up anyway. Nvidia, AMD and Broadcom indicated interest in up to $5 billion of the common stock offering. The suppliers selling Meta its chips want to own a piece of the customer.
A Fair Price, With the Bear Case Attached
At about $620, Meta trades near 21 times trailing earnings and roughly 19 times forward estimates. That is a modest multiple for a business growing sales in the mid-20s.
Wall Street remains on board. The average 12-month price target across 62 analysts sits near $847, about 36% above Tuesday's close.
The risk is that the spending never earns its keep. Reality Labs, the glasses and headset unit, is on track to lose $18 billion to $19 billion this year, and Meta has said only that it will keep investing aggressively in 2027.
Legal pressure is not finished either. More youth-related trials are scheduled in the coming months, and California votes November 3 on a wealth-tax measure that Meta's own filing ties to its new share structure.
If investors decide the AI build is a money pit, the stock's March low near $520 is a realistic marker. That would be another 16% down from here.
The Bottom Line
Meta is still one of the most profitable advertising businesses ever built. People use its apps every day, and advertisers keep paying more to reach them.
What changed this month is how the next chapter gets paid for. The company has moved from returning cash to raising it, and the stock has repriced to reflect that.
The buyers in this week's offering, including the chipmakers, were betting that $625 is a reasonable entry for a long hold. Tonight's reports from Alphabet and Microsoft will show whether the rest of Big Tech is making the same bet with its own money.
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