Meta Lost $400B, Issues More Stock, Analysts Still See 1.4x Potential

Meta Platforms has seen about $400 billion wiped from its market value since late September. The company, which runs Facebook and Instagram, on Monday began a $35 billion stock offering to fund its artificial intelligence investments.

Issuing new shares dilutes existing shareholders' claim on future earnings. Nevertheless, Wall Street analysts continue to rate the stock a buy, setting an average price target roughly 1.4 times the current level.

Reasons Behind Meta's Stock Sale Following a $400B Drop

In the third quarter, Meta invested $34.9 billion in data centers, semiconductors, and other equipment. That spending left free cash flow — the cash remaining after such expenses — at negative $2.12 billion, per the company's earnings release. In the same quarter of the previous year, free cash flow was positive $10.6 billion.

Long-term debt grew to $80.9 billion from $58.7 billion at the end of 2025. The company also did not repurchase any shares during the quarter.

Operating margin — the portion of revenue left as profit from operations — fell by half to 20%. A large part of that decline resulted from a $9.89 billion legal charge.

That charge relates to a settlement with 52 US state attorneys general concerning teen mental health claims. Revenue nevertheless rose 26% to $64.6 billion.

Meta expects to spend between $135 billion and $145 billion this year. A filing with the SEC also details plans to sell up to $60 billion of new non-voting Class C shares starting in early 2027. These shares raise capital without diluting Mark Zuckerberg's voting control.

NVIDIA, AMD, and Broadcom have expressed non-binding interest in purchasing up to $5 billion of the new shares.

$400 billion has been wiped out from $META market cap in the last 14 days as the stock crashes 20%, officially entering bear market territory

Reasons:

1. Meta spent $34.9 billion in one quarter, and expects to spend $135 billion to $145 billion in 2026

2. Its cash after…

— Bull Theory (@BullTheoryio) October 27, 2026

Analyst Outlook for Meta Stock Following the Drop

At the time of writing, Meta shares were trading around $624, roughly 20% below their September high — the level commonly defined as a bear market.

Nonetheless, 38 out of 44 analysts monitored by TipRanks assign a buy rating, with none recommending a sell. The average price target of $852.31 represents about a 36% premium to the current price. The lowest target stands at $580, which is already below the current level.

When Meta announced its results, CEO Mark Zuckerberg defended the expenditure.

“Our investments are paying off, the core business is strong, and we’re seeing velocity across the board.”

Microsoft and Alphabet are scheduled to report earnings on Wednesday, and their rising AI costs will face similar scrutiny.

During this earnings season, investors have penalized large technology companies whether they increase or decrease AI spending. Meta now faces that no-win test with negative free cash flow.