Meta outlook revised to negative after cash flow turns negative
Rising artificial intelligence spending and heavier capital investment are increasing pressure on Meta's financial profile. The shift comes after the company reported negative free cash flow for the first time and projected full-year capital expenditures of $135 billion to $145 billion.
Highlights
- S&P Global Ratings revises Meta’s outlook to negative, citing elevated capital expenditures and negative free cash flow driven by AI-related spending.
- Meta reports negative free cash flow of $2.12 billion for the first time, with projected full-year capex between $135 billion and $145 billion.
- Meta shares fall 7% after earnings and finish October down 15%, the worst monthly performance in four years despite beating revenue expectations.
Credit outlook change follows spending surge
As reported by CNBC, citing S&P Global Ratings, the ratings agency assigns Meta a negative outlook over concerns about cash flow and AI-related spending. It says the revised view reflects uncertainty around the company's elevated capital expenditures and its negative free cash flow.Meta says in its third-quarter earnings report last week that it expects full-year capex in a range of $135 billion to $145 billion. The company also reports negative free cash flow of $2.12 billion, moving into the red for the first time.
Market reaction highlights investor concern
Investor unease is already visible in the stock's recent performance. Meta shares sink 7% after last week's earnings report, even though the company beats revenue expectations.The stock finishes October down 15%, marking its worst month in four years. Meta does not immediately respond to a request for comment.
S&P 500 losses driven by tech and semiconductor weakness highlighted investor anxiety about whether AI-related investment can remain sustainable amid higher borrowing costs. Our earlier coverage also noted the index slipping below key short-term moving averages, with elevated volatility and critical support levels coming into focus as sentiment toward big tech cooled.
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