Meta Stock Plunges After Tax Hit Hammers Earnings

Meta shares plunged 11% on Thursday as investors digested a $16 billion tax charge that took a huge chunk out of the company's earnings. The stock drop marked Meta's steepest single-day loss since October 2022, per Forbes. The Facebook parent reported quarterly earnings per share of just $1.05—a staggering 84% below the $6.72 analysts expected, even though the company beat revenue forecasts with $51.2 billion.

The dismal earnings were largely due to a one-time tax hit tied to President Trump's "One Big Beautiful Bill," Meta said, adding that it expects lower US federal tax payments through next year and beyond. Without the tax charge, Meta said earnings per share would have hit $7.25. The company is also facing skepticism over its massive spending on AI, CNBC reports. Despite the earnings miss, Meta raised its capital spending outlook to as much as $72 billion, with CEO Mark Zuckerberg saying the company is ramping up investment to be ready for what he calls the coming era of "superintelligence."

During Wednesday's earning call, Zuckerberg said the company is aggressively increasing capacity to ensure it is "ideally positioned for a generational paradigm shift in many large opportunities." Meta's spending spree includes a $14.3 billion investment in AI startup Scale AI and the hiring of its CEO, Alexandr Wang, to lead Meta's new Superintelligence Labs. The company's Reality Labs division, which handles VR and smart glasses, logged a $4.4 billion operating loss but did slightly better than Wall Street expected. Meta shares remain up around 10% for the year.