Meta Platforms (META): advertising pays for an AI build-out that is now eating the cash flow

Meta Platforms — called Facebook, Inc. until October 2021 — runs Facebook, Instagram, WhatsApp, Messenger and Threads, the Meta AI assistant, and a hardware unit that makes Quest headsets and Ray-Ban Meta glasses. In 2025 it took in $201.0 billion, 22.2% more than in 2024, and 3.58 billion people used at least one of its apps every day in December 2025. At the Oct 5, 2026 close of $741.90, it was worth $1.89 trillion.

One business pays for everything

Advertising alone was 97.6% of revenue. The apps earned a 51.6% operating margin. Reality Labs lost $19.2 billion in 2025 on $2.2 billion of sales, and has lost money every year since 2019, the first year its 10-K shows the segment separately: $88.1 billion in total through 2025, plus $8.6 billion more in the first half of 2026. By customer location, the United States and Canada provided 39.2% of revenue, Asia-Pacific 26.8%, Europe 23.2% and the rest of the world 10.8%.

The AI build-out, in the cash-flow statement

Capital spending on servers, data centers and network infrastructure reached $72.2 billion in 2025. For 2026, the company told investors on July 29 that it expects $130 billion to $145 billion. The effect is already visible. In the second quarter of 2026, $31.08 billion of capital spending left $784 million of free cash flow. Meta bought back no stock in the first half of 2026, sold $25 billion of bonds in May, and saw its long-term debt rise from $58.7 billion at the end of 2025 to $83.7 billion at the end of June 2026.

Growth on the revenue line is strong — 30.4% in the first half of 2026 — but operating profit grew only 9.6%, and in the second quarter it fell 8%, after $2.40 billion of legal charges and $1.18 billion of severance from a layoff of about 8,000 employees in May 2026.

A profit line with two tax items

Net income in 2025 was $60.5 billion, below 2024’s $62.4 billion, but the drop is a tax item, not the business: the third quarter of 2025 carried a one-time $15.93 billion charge from the new U.S. tax law (OBBBA), with no immediate cash effect. Without it, 2025 profit would have been about $76.4 billion. In the first quarter of 2026, an $8.03 billion tax benefit reversed part of that charge.

Over the twelve months to June 2026, net income was $68.1 billion, giving a price-to-earnings ratio of about 28. Without the two tax items it is 24.9, and market value divided by operating profit is 21.7.

Earlier footnotes: 2012, the IPO year, had only $53 million of profit after $1.13 billion of stock-compensation expense triggered by the IPO; 2019 included a $5.0 billion FTC privacy penalty; 2022 brought the only yearly revenue decline in the company’s history (−1%, with $5.96 billion attributed to the strong dollar) and $4.61 billion of restructuring, followed by $3.45 billion more in 2023.

From a $38 IPO

• Incorporated in Delaware in July 2004; Mark Zuckerberg wrote the first version of Facebook himself.
• IPO in May 2012 at $38.00 a share, raising about $6.8 billion; first trading day May 18, 2012.
• Instagram in 2012 ($521 million in cash and stock), Oculus in 2014 (23 million shares plus $400 million) and WhatsApp in 2014 ($17.2 billion).
• First dividend announced on February 1, 2024: $0.50 a share per quarter, raised to $0.525 in 2025 and not raised again through September 2026.
• On November 18, 2025, Meta won the FTC antitrust case that sought to separate Instagram and WhatsApp; the FTC appealed on January 20, 2026.

Meta has never split its stock. $1,000 at the IPO price would have been worth about $19,500 at the Oct 5, 2026 close, or about $19,700 with dividends reinvested. It was not a straight line: every monthly close from May 2012 to July 2013 was below $38, and between September 2021 and November 2022 the stock fell 76.7%, from $382.18 to $88.91, only regaining the 2021 peak in January 2024.

Control, insiders and funds

Mark Zuckerberg is founder, chairman and chief executive. He owns 99.8% of the Class B shares, which carry ten votes each — 60.8% of the voting power with about 13% of the shares.

No Meta insider bought stock on the open market in the twelve months to October 5, 2026. Meta’s proxy statement says its executives and directors may only trade through 10b5-1 plans, and $242.3 million was sold that way, led by chief financial officer Susan Li ($94.6 million, of which $36.5 million through a family foundation), Chris Cox ($55.0 million), Javier Olivan ($36.4 million), Zuckerberg ($21.4 million) and Andrew Bosworth ($21.2 million). Zuckerberg’s sales were made by Chan Zuckerberg philanthropic entities, all on September 24, 2026, under a plan adopted in January.

Nineteen of the 38 managers this site tracks held Meta at the end of June 2026. The two largest positions were almost identical: Baillie Gifford with 3.20 million shares and Bill Ackman with 3.196 million, each worth about $1.80 billion at the June 30 price of $563.29. Baillie Gifford has trimmed its stake for seven quarters in a row; Ackman added 20%. Renaissance Technologies, Andreas Halvorsen and David Tepper added the most, while Ray Dalio cut his position by 62% and Dan Loeb sold out. The stock has since risen 31.7%.

These figures describe the past and are not investment advice. The Meta page has the same data, updated daily.