To The Moon

I think one lesson $Meta Platforms, Inc.(META)$ CEO Mark Zuckerberg needs to learn is, never release its company’s earnings on the same day as other US tech giants.

It exposes a company for comparison and you don’t want that, not when quarterly earnings are “less” than stellar.

On Wed, 29 Oct 2025, META like other US listed companies released its Q3 2025 earnings report.

• Revenue: $51.24 billion, up +26% YoY, beating analyst expectations of $49.41 billion.

• Earnings per Share (adjusted): $1.05, well below the $6.72 estimate. Excluding the tax charge, adjusted EPS would have been $7.25.

• Net income: plummeted -83% to $2.71 billion, heavily impacted by the one-time tax charge related to the US Corporate Alternative Minimum Tax and valuation allowances.

Other Information.

• Capital Expenditures (Capex): Raised guidance to $70–72 billion, up from $66–72 billion, driven by aggressive AI infrastructure investments.

• Expenses: Total expenses forecast increased to $116–118 billion, up from $114–118 billion.

• Reality Labs (Metaverse): Continued losses of $4.4 billion on $470 million in sales. No new VR headset this year, and Q4 2025 revenue is expected to decline.

• User Growth: 3.54 billion daily active users (DAU) across apps, slightly above expectations.

• AI Products: Meta Ray-Ban Display glasses sold out; Meta AI app downloads surged +56% MoM after launching “Vibes,” an AI-generated video feed.

Surprise Of The Day.

META’s one-time, non-cash tax charge of $15.93 billion due to Trump’s One Big Beautiful Bill Act, came as a surprise to Wall Street’s analysts.

The painful one=time lump sum payment paradoxically will reduce Meta’s future federal cash tax payments.

It is an unusual move that deviates from other US tech giants ( $Alphabet(GOOG)$, $Microsoft(MSFT)$, $Amazon.com(AMZN)$ etc…) who are using the tax law to gradually save on taxes by deducting investments faster, avoiding a big lump sum charge in their current earnings.

Is the lump sum tax payoff a right and calculated strategy, only time will tell.

Meta's latest Q3 2025 earnings report showed strong revenue growth but has been overshadowed by significant concerns mainly coming from Wall Street.

Red Flag and Concerns.

Wall Street made sure META was (clearly) aware of their disappointment in the company. (see below)

On Thu, 30 Oct 2025, META stock price fell a whooping -11.33% (-$89.85) to end the day at $665.78 per share.

As of 31 Oct 2025

To Wall Street, the red flags were:

• Tax charge optics. The massive one-time tax charge drastically lowered net income and EPS, causing investors disappointment.

• A surge in expenses, especially the +32% increase in total costs driven by (1) AI talent hiring, (2) data center expansion, and (3) infrastructure ramp-up — all raised fears of margin compression.

• Operating margin fell short of expectations.

• Meta’s aggressive AI infrastructure spending caused skepticism among investors about the return on investment (ROI), with capex growing faster than historical trends and projected to grow significantly in 2026.

• What made it “worse” is Meta’s spending like GOOG & MSFT and without peer’s cloud businesses. Unlike its peers, Meta’s AI infrastructure is for internal use, not monetized through external clients.

• No Monetization Path: GOOG and MSFT sell AI compute to others. Meta’s AI investments lack a clear revenue stream, making it harder for investors to see how spending translates into profit.

• Management emphasized the necessity of large scale AI investments but failed to fully convince the market about near-term profitability from these investments.​

• Investor Skepticism: Zuckerberg’s justification—“trust us, it’ll be profitable eventually”—echoes past overconfidence. Investors are wary of another costly pivot with uncertain returns.

• Reality Labs Still Bleeding: Despite pivoting to AI, Meta’s Metaverse unit continues to burn cash, with no new hardware to boost sales.

• Layoffs in AI Unit: Meta laid off 600 workers in its Superintelligence Labs, raising questions about internal execution and strategic clarity.

Case of Déjà Vu?

Analysts and investors see META’s historic error repeating itself, again.

• Zuckerberg’s Pattern. Meta is making another big bet, just like it did with the Metaverse. This time its with AI. The hope is that it will change things in the future. However at the moment, it's causing losses and confusing investors.

• No Clear Business Model: The Metaverse lacked a monetization roadmap. Its announced AI spending is similarly opaque. CEO Zuckerberg floated the idea of selling excess compute, but admitted it’s a “last resort” rather than a strategy.

• Investor Fatigue: After the Metaverse flop, investors are less willing to accept “build now, monetize later” narratives. They want clarity, not just ambition.

• Trust Deficit: Meta’s track record with big pivots has been mixed. The market is punishing the company for repeating the same high-risk, low-transparency playbook.

In conclusion, Meta’s Q3 2025 earnings reflect robust revenue growth powered by AI-enhanced advertising but also substantial risks as heavy AI infrastructure investments and a large tax charge dampen earnings and trigger investor concerns.

This scenario parallels Meta’s previous strategic pivot to the Metaverse, where heavy upfront spending weighed on profits and investor sentiment.

US market struggles to watch if META’s "all-in" AI gambit will pay off OR turn into another costly struggle like Metaverse. What do you think ?

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• Do you think META has hand up a sterling set of Q3 earnings, if not for the one-time tax ’?

• Do you think META is making the same mistake with its heavy-handed AI investment; reminiscent of its Metaverse investment, that is still burning a hole in META’s books.

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