- The Meta share price is down heavily as the increased capex guidance weighs on the stock despite stellar earnings.
The Meta share price is trading amid stellar earnings, which are supportive of the stock, and a capex shock, which is a major headwind.
Meta has reported its first-quarter earnings, and despite all metrics beating market expectations, the stock is down heavily in premarket trading. Investors are particularly spooked by the free cash flow dilution that such a massive capex increase could bring. META is currently trading at $606.22, having closed at 669.12 on 29 April.
Meta Platforms Inc reported its first-quarter earnings for the 2025 fiscal year. Diluted earnings came in at $10.44 per share, while revenue rose 33.1% YoY to $56.31 billion. Net income rose 60.9% YoY to $26.77 billion. The company’s earnings per share increased 62.4% from the same quarter the year before.
Revenues were driven mostly by a 19% increase in ad impressions, which was offset by a 12% increase in ad prices. Reels usage surged, but still delivered lower monetization than Feed and Stories. The number of people reached by ads rose 4% YoY.
So why is the Meta share price down in premarket trading?
Capex spending on AI and infrastructure continues to rise. The company is planning to spend of $125 billion – $145 billion to build additional data centers and ramp up its research and development department. This is part of a total increase in operational expenses. An ongoing concern bedeviling many AI companies is whether the heavy capex bill will eventually pay off with vastly improved profit margins.
Meta Share Price: Macro Drivers
1. Capex repricing
Meta raised its 2026 capex guidance to $125–$145B (prior: $115–$135B), with the increase tied to AI data center construction and R&D costs. This constitutes the largest driver of near-term price action as it alters the company’s free cash flow dynamics.
2. Strong ad revenue
Revenues from advertising grew sharply as the company raised ad prices and saw ramps in various ad divisions and target markets. This suggests that AI-driven targeting is delivering on expectations. However, the market wants more proof that AI spending will deliver the requisite returns on investment.
3. Regulatory headlines
Regulatory pressure is coming from Asia, where China has ordered the reversal of a completed acquisition of an AI startup, Manus. This action marks a sharp escalation in regulatory scrutiny of the company’s fintech investments. The same regulatory overhang is also present in Europe and Africa.
Meta Share Price Catalysts (Near-term)
1. Market Position (post-earnings) vs. capex narrative: The key near-term catalyst is which side investors will swing to. Will investors base their sentiment and positioning on the stellar earnings, or will the capex narrative dominate?
2. Guidance credibility
Meta’s Q2 revenue guidance remains at $58–$61B. Traders will have to decide whether this revenue guidance will remain solid in the face of the company’s raised capex projection.
Meta Share Price Forecast
Base case: the price action remains in a choppy consolidation, albeit with downside bias within the large symmetrical triangle. This is a perfect setup for a two-way trade, where the company’s strong fundamentals provide support, but negative AI capex headlines cage the rallies.
Bull case: the trigger for a rebound in Meta’s share price comes from a reframing of the capex increase as a component-driven, finite cost that will deliver ROI, amid strong momentum in the ad revenue stream.
Bear case: a deeper de-rating awaits if investors see the capex increase as a major free cash flow constraint. In addition, any regulatory escalation could be a major turnoff for investors and extend the post-earnings selloff.
Meta Share Price: Technical Outlook
The double top rejection at the 690.73 resistance and the descending trendline barrier suggest a retreat in the Meta share price. The current premarket price currently challenges the 635.65 support. If this pivot is degraded, a further southbound move towards the prior low of 30 December 2024 and 19 November 2025 at 584.96 cannot be ruled out.
However, a break of the 690.73 resistance also takes out the trendline barrier and opens the door to the 741.16 resistance. A further push north targets the 795.46 high of 13 August 2025.
