Meta grew Q3 2026 revenue by 26.1% YoY to $64.6 billion, with the price per ad up 14% YoY. Yet CapEx consumed 103.5% of operating cash flow, turning free cash flow negative.
Five days after the results, Meta priced $25.0 billion of Class A shares under forward sale agreements and $12.5 billion of mandatory convertible preferred stock. The shares closed at $606.73 on 2 November, 13% below the 21 October close.
All four of our models are long. META is also in the Systematic Portfolio. As investors, our key question today is whether the ad engine can pay for the AI build, or whether shareholders and lenders will have to fund it.
In today's note, we cover the quarter, how Meta is paying for its data centres, valuation and what today's price implies.
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DISCLAIMER: This newsletter is intended for educational purposes only. Any information or analysis in this note does not constitute an offer to sell or a solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice, nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.
