Meta Shares Fall Nearly 7% as Free Cash Flow Turns Negative, CDS Spread Hits Record High

Meta (META) shares fell nearly 7% to $648.85 on Thursday after the company reported negative free cash flow and raised the lower bound of its full-year capital expenditure guidance, stoking investor concerns over the scale and funding of its AI investments. Meta's five-year credit default swap spread rose to a record high Thursday, signaling growing worries about credit risk as AI spending expands. The company now projects full-year capex of $135 billion to $145 billion, lifting the prior $130 billion floor by $5 billion while keeping the upper bound unchanged. Third-quarter free cash flow was negative $2.12 billion. Revenue rose 26% year over year to $64.6 billion, beating analysts' $63.37 billion estimate. Earnings per share came in at $3.83, though analysts noted it was unclear whether the figure is directly comparable to Wall Street's $5.75 estimate. Meta also disclosed plans for a non-voting Class C common stock to preserve its founder-led governance structure and increase fundraising flexibility. An SEC filing said CEO Mark Zuckerberg could face billions in taxes under a proposed California wealth tax and might leave the state; the new stock plan prompted him to stay.