Welcome to Staten News — where a $64.6 billion quarter can still sink the whole Nasdaq.
Meta beat on revenue, beat on earnings once you strip out a legal bill, and guided the fourth quarter right around where Wall Street wanted. Then it showed the cash flow statement. The stock fell 7% on Thursday.
And it took the rest of tech down with it.
💸 The Quarter That Cost Money
Revenue came in at $64.6 billion, up 26% from a year ago, ahead of the $63.3 billion analysts expected. Reported earnings were $3.83 a share. Pull out the $9.89 billion charge tied to the August settlement with 52 attorneys general and it's $7.40.
Here's the number that mattered. Capital spending, including finance lease payments, hit $34.91 billion for the quarter. Cash from operations was $32.79 billion. Free cash flow landed at negative $2.12 billion, Meta's first cash outflow in more than a decade.
Read that again. One of the most profitable ad machines ever built burned cash in a quarter where revenue grew 26%.
The stock was up about 2% after hours Wednesday. By Thursday's close it was down 7%. Investors needed one night of sleep to decide the AI bill had finally landed in the wrong column.
🃏 The Share Count Move
Meta also announced a dividend of nonvoting Class C shares, one for every Class A and Class B share, which works out to a two-for-one split. It takes effect January 19, 2027, and Meta plans to list the new shares on Nasdaq.
Translation: Meta now has a stock it can issue to raise money and pay people without touching Zuckerberg's voting control. Full-year capex guidance tightened to $135 billion to $145 billion, and the company didn't give a 2027 number at all.
That's not a stock split. That's a funding plan wearing a stock split's clothes.
🔌 Chips Took the Bigger Hit
The Philadelphia semiconductor index fell 6.7% Thursday, its worst day since June 23. It now sits more than 26% below its June 22 record, even though it's still up 51.5% on the year.
The Nasdaq dropped 2.6% to 26,008.86, its steepest fall since early June. The S&P 500 lost 1.21% to 7,663.43. The Dow, somehow, finished up 11.89 points at 52,867.98 after flipping green minutes before the bell.
Tesla fell 3.1% too, and that one stung differently. It surprised with positive free cash flow and cut its 2026 spending plans. The market sold it anyway.
Because when the selling is about the AI spending cycle, good news from inside the sector doesn't buy much protection.
🛢️ Oil Won't Leave the Room
Brent crude traded around $114 early Friday, a five-month high and on pace for roughly a $6 weekly gain. WTI crossed $100. Houthi attacks on Saudi energy infrastructure drove the move, and Aramco ordered staff to evacuate its Dhahran headquarters.
ING now calls its old $80 fourth-quarter Brent forecast "unattainable." Polite word for dead.
Oil at $114 feeds straight into the inflation story the Fed already worries about.
🗓️ Where the Week Stands
Through Thursday's close, the week looks like three different markets. The Dow is up about 865 points, roughly 1.7%, from last Friday's 52,002.41. The S&P 500 is basically flat, up about 4 points. The Nasdaq is down about 0.5%, after losing 4.4% the week before.
Old economy up. AI trade bleeding. The index in the middle pretending nothing happened.
🏦 Wednesday's Fed Call
The Fed announces its next decision Wednesday, October 28. As of Friday morning, prediction markets put a hold at about 94% and a quarter-point hike at about 6%, based on Kalshi and Polymarket pricing. December is where the hike bets live, at roughly 72%.
Our new call for next week: energy keeps outperforming as long as Brent holds above $110, and chip names stay heavy until a big spender shows a quarter where capex and cash flow stop fighting. Could we be early on chips? Sure. But a sector that just lost 6.7% in a day needs a reason to bounce, and Thursday didn't hand anyone one.
This is the week the market stopped grading AI spending on revenue and started grading it on cash. The Fed adds its own grade on Wednesday.
Sources: Hawaii Tribune-Herald market wrap, SiliconANGLE on Meta Q3, OilPrice.com on Brent, DeFi Rate Fed odds tracker
This is not financial advice. Always do your own research.
— The Bandicoots 📉🛢️