Meta Shares Plunge as AI Spending Triggers Market Rout
Meta Platforms shares fell over 7% after the company reported its first negative free cash flow since 2012 and announced a massive AI spending surge.
Shares of Meta Platforms Inc. plummeted between 6% and 8% on October 22, 2026, erasing over $100 billion in market value. The decline followed the company's report of a $2.12 billion negative free cash flow for the third quarter, its first such deficit since 2012. Investors reacted sharply to Meta raising its 2026 capital expenditure forecast to between $135 billion and $145 billion and increasing total future spending commitments to $825 billion to support its Muse AI platform.
To fund these requirements without diluting voting power or damaging its credit rating, Meta announced plans to issue a new class of non-voting Class C shares starting as early as fall 2026. This financial strain pushed the cost of insuring Meta's debt against default to an all-time high of approximately 115 basis points. Simultaneously, a New Mexico judge ordered the company to pay a $25 billion fine for misleading users about data privacy policies related to the Cambridge Analytica scandal.
The volatility triggered a broader market rotation into safety trades like U.S. Treasurys. Other AI-linked firms, including Nvidia Corporation, SpaceX, and various neocloud providers, saw significant share price drops as investors questioned the returns on massive infrastructure investments. The selloff was further compounded by macroeconomic pressures, including rising oil prices following attacks in Saudi Arabia, which sparked fears of inflation and higher borrowing costs for the tech sector.
