Meta Shares Fall 7% as Capital Spending Exceeds Operating Cash Flow

Revenue rose 26% to $64.60 billion in the quarter, yet property and equipment spending exceeded operating cash flow for the first time since 2012. Free cash flow turned negative, and the company raised the lower end of its full-year capital expenditure range. Meta also declared a one-time dividend of a nonvoting Class C share for each share held, which it said should work like a two-for-one split. The drop erased about $124 billion of market value in a single session, the fourth-largest loss in the S&P 500 that day. Investors also weighed rising credit concerns as the company accelerates AI infrastructure spending, and the broader tech sector fell alongside it. For founders, Meta's numbers show that record revenue does not protect a company when infrastructure spending outruns cash flow. Anyone raising money for compute should expect investors to ask when that spending will pay back.