Meta Platforms Shares Drop Over 10% After Q2 Earnings Report
Meta Platforms (NASDAQ: META) shares fell as much as 10.4% following its second-quarter earnings report, despite revenue beating expectations at $60.8 billion—a 28% year-over-year increase. The drop was driven by declining profits and a significant decline in free cash flow to just $784 million from $12.4 billion the previous quarter. The company attributed its financial struggles to heavy capital expenditures, particularly on data centers, with Q2 spending reaching $31 billion—far exceeding Apple’s annual capex budget. CEO Mark Zuckerberg outlined Meta's AI ambitions during an earnings call but investors remain skeptical about when these investments will yield returns. The Reality Labs division continued to post losses at -$4.6 billion for the quarter. Meta has a strong balance sheet with over $90 billion in cash and marketable securities, allowing it to absorb current spending pressures. However, Wall Street is increasingly concerned that free cash flow could turn negative if capital expenditures continue rising.
Topics: AI spending free cash flow Meta Platforms profit decline Q2 earnings report revenue growth