Meta Platforms' Q3 results in 2025 showed record revenue, a growing user base, and solid demand for advertising. However, Meta stock still tumbled over 9% in after-hours trading on October 29th, costing investors billions in market capitalization. The market drop signified that investors were paying less attention to the growth of revenue at the top of the income statement. They were instead more focused on the concerning figures at the bottom, as well as future spending guidance.
Meta announced revenue for Q3 of $51.2 billion, a 26% increase year-over-year, representing approximately the strongest growth rate in nearly three years. In addition, daily active users on Facebook, Threads, Instagram and WhatsApp increased to 3.54 billion for an 8% increase. However, the net income collapsed from $15.7 billion to $2.7 billion, representing an 83% decrease in net income, and was principally driven by a one-time tax expense of $15.9 billion associated with the new US corporate tax legislation.
While this tax was technically a non-cash charge, it nevertheless suggests substantially lower profits from Meta's earnings compared to prior quarters. Without this hit from the new tax legislation, the tech giant would have had an adjusted earnings per share (EPS) of $7.25 compared to the reported EPS of $1.05.
Three key areas raised some concerns about holding Meta stock:
Cautious 2026 Outlook: Referring to the resurging growth, management warned expenses would still rise in 2026, given its focus on hiring and infrastructure development.
Reality Labs Losses: The AR/VR business lost $3.8 billion in 2025 and continued to temper investor enthusiasm for VR and Meta's vision for the metaverse.
Ad revenue at Mark Zuckerberg-led company remains strong, benefiting from high engagement trends, especially the monetization of Reels and WhatsApp.
Also Read: Netflix Q3 2025 Earnings Miss Expectations as $600 Million Brazil Tax Dispute Weighs on Profit
Meta's core business is performing strongly, yet optics (and the fear around expenses) provoked the selling pressure. Investors still want to see evidence that a long-term investment in AI can drive near-term opportunities. The fundamentals and growth story remain seemingly intact at Meta. However, limited visibility into improvements to profitability may keep weight on the company despite the extraordinary growth expectations.