Down 18% From Its October High, Should You Buy the Dip on Meta Stock?

Meta Platforms (META -1.53%) faced a challenging year in 2026, with its stock price plummeting to negative territory. However, the stock experienced a surge in September following a favorable reception of Meta's Muse project, an AI-driven tool designed to assist with daily tasks. This positive momentum was abruptly halted in October after a disappointing earnings report.

Meta's Q3 earnings revealed a 26% revenue increase from the previous quarter, aligning with expectations. Despite this, the company's earnings were impacted by a substantial $9.89 billion settlement with U.S. state attorneys general regarding the potential negative effects of social media on teenage wellbeing. Subtracting this settlement would have provided a more favorable profit figure that the market could have better absorbed.

Despite these challenges, Meta's stock appears reasonably priced at approximately 17.5 times next year's earnings, suggesting it may be a worthwhile investment opportunity. The primary concern for investors is Meta's heavy AI spending, which has resulted in negative free cash flow in Q3. To bridge this gap, Meta plans to issue $95 billion in new shares, diluting the value of existing shareholder holdings.

While these actions may raise concerns among short-term investors, long-term investors should remain optimistic about Meta's prospects. If the company can demonstrate a substantial return on investment from its AI endeavors, particularly in the nascent stages of the AI boom, it could justify its spending and drive future growth.

With a 26% revenue increase this quarter, Meta's stock could be considered an attractive buy at its current valuation, provided the company continues to demonstrate strong growth in the coming years.