Meta’s Q3 Earnings Hit by $16 Billion Tax from Trump Bill
Meta, the parent company of Facebook and Instagram, reported remarkable third-quarter revenue of $51.2 billion, a 26% increase year-over-year. However, the company’s financial performance was significantly impacted by a hefty tax charge stemming from President Trump’s One Big Beautiful Bill Act, resulting in earnings that disappointed Wall Street.
Impact of the One Big Beautiful Bill Act
In its earnings announcement, Meta attributed a $15.93 billion non-cash income tax charge to the recognition of a valuation allowance against its U.S. federal deferred tax assets. This was a direct consequence of the Corporate Alternative Minimum Tax implemented through the One Big Beautiful Bill Act.
Q3 Financial Overview
- Net income: $2.71 billion (an 83% decline due to the tax charge).
- Earnings per share (EPS): $1.05, below the analyst consensus of $6.69.
- If excluding the tax charge, diluted EPS would have been $7.25.
Despite these setbacks, Meta’s user statistics showed growth. In September, the average daily active users across all Meta platforms reached 3.54 billion, marking an 8% increase compared to the previous year.
CEO Mark Zuckerberg’s Remarks
Mark Zuckerberg, Meta’s founder and CEO, emphasized a strong quarter for business and community engagement. He expressed optimism about the company’s future, particularly with the launch of Meta Superintelligence Labs and advancements in AI technologies.
Reality Labs Performance
While Meta’s main business thrived, its Reality Labs segment continued to face challenges. In Q3, the segment generated $470 million, up from $270 million a year earlier, but it still suffered an operating loss of $4.43 billion.
Future Outlook
Meta forecasts fourth-quarter revenue between $56 billion and $59 billion. For 2025, the company predicts capital expenditures will reach $70 billion to $72 billion, up from a previous estimate of $66 billion to $72 billion. Meta plans to increase its capital spending significantly in 2026 to enhance its AI computing infrastructure.
Current Financial Position
As of September 30, Meta’s cash, cash equivalents, and marketable securities totaled $44.45 billion. Additionally, the company employed 78,450 individuals, marking an 8% increase year-over-year.
