October 25, 2026 | TickerRoast Markets Analysis
Within 24 hours, Meta was hit with the largest penalty in its history and reported its first quarter of negative free cash flow in more than a decade. Only one of those two events really moved the stock, and when I looked closely at the numbers, I understood why.
A Record Penalty in New Mexico
On Wednesday, October 21, New Mexico State District Judge Francis J. Mathew ordered Meta to pay $25 billion, according to the Associated Press. In September, a jury had found the company liable for more than 43 million violations of the state’s consumer protection laws over misleading statements about how it handled users’ personal data, a case rooted in the Cambridge Analytica scandal. The state had asked for $35 billion to $40 billion, while Meta argued for no more than $3.4 billion.
Meta’s chief legal officer, C.J. Mahoney, said the company expects to win on appeal, according to the AP, while Attorney General Raúl Torrez called the judgment “an unambiguous message, to Silicon Valley.” What struck me is the context: New Mexico was one of only two states, with Florida, that did not join an $18 billion settlement Meta reached with the other states in August. Collection could take years, and interest would accrue during the appeal.
The market barely reacted. Based on Yahoo Finance data, Meta closed October 21 at $697.52, slightly higher on the day. For a company of Meta’s size, an appealable penalty, however large, did not change the investment picture.
The Number That Actually Moved the Stock
That evening, Meta reported third-quarter results that looked strong at first glance. According to an analysis by XTB’s Michał Stajniak, revenue rose 26% to $64.6 billion, ahead of the $63.3 billion expected, and fourth-quarter revenue guidance of $73 billion to $76 billion came in around or above consensus. The shares initially rose about 3.5% after hours.
| Meta, Q3 2026 | Figure | A year earlier |
|---|---|---|
| Revenue | $64.6B | +26% growth |
| Capital expenditures (incl. finance leases) | $34.9B | +80% |
| Free cash flow | -$2.1B | +$10.6B |
| Share buybacks in 2026 to date | None | $26.2B in the same period |
| Long-term debt | $80.9B | $58.7B |
| 2026 capex guidance | $135B–$145B |
Figures are from XTB’s analysis of the results. This is the table that changed my reading of the quarter. Capital spending jumped 80% to almost $35 billion in three months, pushing free cash flow negative for the first time in more than a decade. Meta has made no share buybacks so far this year, its net cash position is close to zero, and long-term debt has risen sharply. The company also announced a new class of non-voting shares, to be distributed one-for-one to existing shareholders from January 2027, which XTB described as economically similar to a 2-for-1 split, with stated uses including capital raising.
By the next morning, the after-hours gain had turned into a 7% drop. Based on Yahoo Finance data, Meta closed October 22 at $648.85, the day the Nasdaq suffered its worst session since June. For me, the message was clear: investors were willing to accept heavy AI spending as long as it was funded by cash flow. Once it starts to be funded by debt and possibly new shares, the tolerance drops.
How the Chart Looks After the Drop
Meta closed Friday at $642.62, based on Yahoo Finance data, down about 17% over one month. The stock is now below its 20-day moving average, near $718, and its 50-day average, near $664, but still slightly above its 200-day average, around $633. The 14-day RSI, near 36, is low without being in oversold territory. I would watch that 200-day line closely, because it is the last major average the stock has not yet broken.
Over twelve months, Meta is down about 12% while the S&P 500 has gained about 13%, based on Yahoo Finance data. That underperformance shows how much the debate around AI spending has weighed on the stock this year, even as advertising revenue kept growing.
What Changes Next Week
Meta’s results have set the tone for the rest of Big Tech. Microsoft and Alphabet report on Wednesday and Amazon on Thursday, and I expect their capital spending plans to be read through the same lens: not only how much they spend, but how they pay for it. Meta, for its part, has said it will keep investing aggressively in 2027, according to XTB, and the appeal in New Mexico will run in the background for a long time. Neither story is over.
Sources
- Meta ordered to pay New Mexico $25 billion for deceiving users about privacy on Facebook (Associated Press) — Anchorage Daily News / AP
- Record-breaking Meta, though with a cash loss — XTB
- Nasdaq plunges 2.6% as AI spending fears spark tech selloff — Honolulu Star-Advertiser
Market data: Yahoo Finance, close of 2026-10-23. Charts generated by TickerRoast from this data.
Disclaimer: This article is for informational and educational purposes only. It provides general financial and business analysis and does not constitute investment advice, a personal recommendation, a recommendation to buy, sell or hold any security, or an offer to transact in any financial instrument. Information is based on publicly available sources as of October 25, 2026 and market data as of the 2026-10-23 close (Yahoo Finance). Past performance is not a reliable indicator of future results; forecasts are uncertain and actual results may differ materially. Investing in shares involves risk, including the loss of capital. The publisher does not guarantee the accuracy or completeness of the information and accepts no responsibility for investment decisions made on the basis of this article. Readers should consult official company disclosures, conduct their own research and, where appropriate, seek advice from a licensed financial adviser. Any relevant financial interests held by the author or publisher in the securities mentioned are disclosed where applicable. This article was prepared with the assistance of AI tools and is based on the sources listed above.
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Anonymous reader poll, just for fun. Not investment advice.
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