"This year, one of the better performers among the Magnificent 7 had been Meta Platforms Inc. ( NASDAQ: META). But its third-quarter earnings report raised investor concerns about the company's massive capital spending on artificial intelligence initiatives. In addition, a report from Reuters suggested that a significant portion of Meta's revenue comes from fraudulent ads. The stock is down 14.8% since the quarterly report was released."
"Let's start by addressing the elephant in the room. Investors should not rely on Meta Platforms' Reality Labs metaverse business to drive the company's near-term future growth. In Q3 2025, Reality Labs generated $470 million in revenue, up from $370 million in revenue in the prior quarter. However, during that same time frame, Reality Labs recorded a loss from operations of $4.43 billion."
"Strong quarterly reports earlier this year (despite a tax charge) had lent credence to the claim that Meta would continue to outshine its competitors over the next year. The share price hit an all-time high of $796.25 back in August. Due to the recent pullback, the stock is up 4.2% year over year, underperforming the broad market. Furthermore, the near-term future of the economy is uncertain-just like the markets themselves-and Meta Platforms CEO Mark Zuckerberg is a controversial figure."
Meta Platforms' third-quarter earnings raised investor concern about the company's massive capital spending on artificial intelligence and a Reuters report suggesting a significant portion of revenue stems from fraudulent ads. The stock fell 14.8% after the quarterly report, leaving shares up only 4.2% year over year and underperforming the broader market despite an August all-time high of $796.25. Reality Labs produced $470 million in Q3 revenue but posted a $4.43 billion operating loss. Investors should not expect Reality Labs to drive near-term growth and should prepare strategies across a wide range of price targets amid economic and market uncertainty.
Read at 24/7 Wall St.
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