Meta Platforms (META) Stock Plunges Over 10% Despite Record Revenue Growth

Key Highlights

• Meta shares plummeted over 10% following its Q1 2026 earnings release, erasing approximately $175 billion in market capitalization
• The company delivered $56.31 billion in quarterly revenue, representing 33% year-over-year expansion — the most robust growth rate since 2021
• Capital expenditure projections for 2026 were elevated to a $125–$145 billion range, increased from the prior $115–$135 billion estimate
• JPMorgan shifted its stance on META to Neutral from Overweight, reducing the price objective to $725 from $825
• The platform’s daily active user count reached 3.56 billion, falling short of analyst projections of 3.62 billion

On April 29, 2026, Meta Platforms unveiled what appeared to be one of its most impressive quarterly performances in recent memory, yet shares tumbled more than 10% in the following trading session. META was changing hands near $610 at the time of publication, a sharp decline from pre-earnings levels exceeding $700.

Meta Platforms, Inc., META

The social media giant generated $56.31 billion in top-line revenue, marking a 33% increase compared to the same period last year. This represents the company’s most accelerated quarterly expansion since 2021. Bottom-line results showed net income of $26.8 billion, translating to $10.44 per diluted share, although this metric incorporated an $8.03 billion one-off tax advantage related to U.S. Treasury R&D regulations.

Even after adjusting for the tax benefit, the company’s profitability remained robust — just not as spectacular as the headline figures suggested.

Advertisement impression volume climbed 19% on a year-over-year basis. The company now counts over 4 million advertisers leveraging at least one of its generative AI creative tools. The Family of Apps saw daily active people hit 3.56 billion, falling below the Street’s consensus forecast of 3.62 billion.

Meta management cited internet connectivity issues in Iran and regulatory limitations on WhatsApp in Russia as contributing factors to the user shortfall.

Wall Street’s Top Bull Turns Cautious

The factor that spooked investors most wasn’t the user growth miss — it was JPMorgan’s unexpected reversal.

Doug Anmuth, a longtime Meta bull and JPMorgan analyst, shifted his recommendation to Neutral from Overweight and lowered his price objective to $725 from $825 on April 30.

The catalyst was Meta’s revised capital spending outlook. The tech giant increased its annual capex forecast to $125–$145 billion, elevated from the previous $115–$135 billion range. This marks the second consecutive upward adjustment. Meta’s initial 2026 capex guidance, established in January, stood at $115–$135 billion.

First-quarter capex totaled $19.8 billion, representing a 47% year-over-year surge. CFO Susan Li attributed the increase to elevated memory chip pricing and expanded data center infrastructure investments.

Anmuth’s apprehension isn’t centered on the spending magnitude itself. His worry focuses on the potential returns. “We believe full-stack AI competition is intensifying and Meta has a more challenging path to returns on heavy AI capex beyond advertising,” he stated in his research note.

His projections show Meta’s capex climbing to $202 billion in 2027, producing negative free cash flow of $4 billion in 2026 and $24 billion in 2027.

AI Investment Breakdown

Meta’s artificial intelligence strategy revolves around proprietary large language models, data center expansion, and its recently unveiled Muse Spark model — the inaugural release from its superintelligence research division.

Daily engagement with Meta AI glasses surged threefold year-over-year during Q1. The Reality Labs segment recorded an operating deficit of $4.03 billion for the quarter.

The majority of sell-side analysts declined to mirror JPMorgan’s downgrade. Barclays, Cantor Fitzgerald, and TD Cowen each reduced their price targets while preserving positive ratings.

Anmuth also identified two immediate obstacles for Q2: more difficult year-over-year revenue comparisons and the implementation of European Limited Privacy Advertisements, which is anticipated to create revenue headwinds beginning in the second quarter.

JPMorgan’s revised $725 price target suggests approximately 8% potential upside from present trading levels.

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