- S&P Global Ratings revised Meta's outlook to negative while keeping its AA- rating, citing uncertainty about elevated capex and negative free cash flow.
- Meta guided FY26 capex to $135 billion to $145 billion and posted negative free cash flow of $2.12 billion in Q3, its first negative free cash flow result.
- S&P questioned Meta's ability to monetize AI investments and said it is unclear when new revenue streams will exceed rising costs.
- Meta shares fell 7% after the Q3 report despite a revenue beat, and the stock finished October down 15%, its worst month in four years.
- Meta plans to raise $95 billion to fund AI initiatives, starting with $35 billion in underwritten public equity offerings and followed by $60 billion through an at-the-market program.
- S&P expects Meta's capex growth to flatten beginning in 2028 but is less certain Meta will curtail spending as previously anticipated.
- Meta disputed the revision, stating it sees significant product and business opportunities supporting its very strong credit profile.
Quotes
“it is unclear when these revenue streams will generate material contributions that exceed their rising costs over the next few years.”
“We respectfully disagree with S&P's assertion about Meta's AI monetization capabilities”