Meta Platforms saw impressive revenue growth in Q3, with ad prices and impressions rising at double-digit rates. However, losses from the Reality Labs division were significant, with massive spending forecasts for 2026 expected. Despite strong results, stock fell due to a non-cash tax charge and underwhelming fourth-quarter guidance. Expenses and capital expenditures are set to soar next year, raising concerns about long-term profitability. On the bright side, Meta produced $10.6 billion in free cash flow and ended the quarter with $44.45 billion in cash, allowing for stock repurchases and dividends. Investors should keep an eye on the company’s spending trajectory and exercise patience before buying the dip. Shares of Meta Platforms are still up significantly over the past six months, despite a recent stock price decline. The price-to-earnings ratio is in the mid-twenties, with capital spending expected to rise in 2026. Analysts recommend caution and staying on the sidelines for now.

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Author Daniel Sparks and his clients have no position in mentioned stocks, but The Motley Fool has positions in and recommends Meta Platforms. The disclosure policy of The Motley Fool applies. Consider the investment advice carefully before making any decisions.

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