Meta Q3 revenue up 26% but US$9.9b legal charge flips cash flow negative

Meta's Q3 2026 report shows a business still growing quickly at the top line, with revenue up 26% to US$64.6b and net income excluding special items reaching US$9.9b, more than triple the prior year. But the cash picture changed sharply. Heavy AI capital expenditure and a US$9.9b legal charge tied to teen safety settlements and broader legal actions flipped free cash flow to roughly a US$2.1b outflow, a stark contrast to the surplus cash the ad empire has historically generated.

The legal charge matters because it turns regulatory risk into a recurring financial factor rather than a disclosure item. Meanwhile, Meta's 2026 capex guidance of US$135b to US$145b adds another layer of spending on top of Reality Labs, which lost $19.19 billion in 2025. Investors now have to weigh whether the ad business can comfortably bankroll this AI push without leaning further on debt, and the stock's post-earnings drop suggests some are reassessing how much short-term pain they will tolerate.