Meta Reports on Oct. 21. I'd Consider Buying the Stock Before It Does.
Earnings are expected to rise more than sixfold. Why is that the wrong figure to watch?
Meta Platforms will release its third-quarter earnings report after the market closes on Wednesday, October 21. Currently trading at around $743, the stock has dipped about 6% below its August 2025 record close of $790. However, it has gained roughly 30% since August 31. Analysts anticipate earnings per share of $6.77 for the quarter, a significant improvement from $1.05 a year ago. The higher earnings figure likely stems from a one-time, non-cash income tax charge of $15.9 billion in the report.
Meta's ad business appears robust, with a 33% year-over-year increase in advertising revenue to $59.4 billion in the second quarter. Management predicts further growth, with third-quarter revenue expected between $61 billion and $64 billion, representing 19% to 25% growth from the previous year. The company's capital expenditures for 2026 are forecasted to range from $130 billion to $145 billion, an increase from $72.2 billion in 2025.
This surge in spending is already impacting cash flow, with free cash flow dropping to $784 million in the second quarter, down from $8.5 billion in 2025.
Despite the potential challenges posed by the weak free cash flow quarter, Meta's 2026 operating income is projected to surpass $83.3 billion from the prior year. However, the upcoming report might lead to a stock dip, especially after its recent rise. Nevertheless, at a valuation of around 22 times expected 2027 earnings, the shares seem reasonably priced considering Meta's growing ad sales.
Investors may want to approach the report cautiously but consider gradually purchasing shares if they believe in Meta's ad business growth potential.
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