TMTPOST --    Meta   Platforms, Inc.   shares   tumbled as much   as 9% in after-hour   trading on Thursday   as the   social media titan posted   a   massive earnings miss   for the past quarter due to a   nearly $16 billion   tax charge.

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Meta ’ s diluted earnings per share ( EPS )   for   the quarter ended   September   30   plunged 83% year-over-year ( YoY )   to   $1.05, whereas analysts called for $$6.68, representing   a 10.8% YoY increase.   Net income also fell 83% YoY.   Operating income gained   18.4% YoY to $18.95   billion, cooling from   a 38%   gain for the   previous quarter. Operating margin fell   3   percentage points YoY to 40%.

Meta attributed   the steep fall in profit   to a one-time   tax charge tied to   U.S. President Donald Trump ’ s One Big Beautiful Bill Act. Implementation of the act   led to the recognition of a valuation allowance against our U.S. federal deferred tax assets, reflecting the impact of the U.S. Corporate Alternative Minimum Tax. As a result, the third quarter provision for income taxes includes a one-time, non-cash income tax charge of $15.93 billion.

Without the tax charge, diluted PES for the   September   quarter would have grew   by $6.20   to $7.25. That suggested   a nearly   seven-fold increase.   Net income would have increased by $15.93 billion to $18.64 billion, compared to the reported net income of $2.71 billion.   Effective tax rate would have decreased by 73 percentage points to 14%, compared to the reported effective tax rate of 87%.   Meta expected a significant reduction in U.S. federal cash tax payments for the remainder of 2025 and future years due to Trump ’ s tax law.

Meta ’ s top line delivered stronger-than-expected   growth   for the   third   quarter. Revenue logged   the   highest growth since   the first quarter of 2024   and popped 26%   YoY to $51.24   billion,   beating Wall   Street   projection of $49.59   billion.   The closed-watched bread & butter advertising earned $50.08   billion with a 26% YoY rise, versus analysts estimated $48.59   billion.

Meta needs its advertising business to continue growing in order to fund an expensive expansion in artificial intelligence   ( AI ) , which is driving the future of the business through improvements to ads, algorithms and personalization. But headlines from the tax   charge   to   the   ongoing   regulatory   risks   are   squeezing   its   profit,   posing   threat to the profitability   when the company is   keeping aggressive   spending for   its   AI push.

Looking ahead Meta   projected total expenses   for the   year   2025   between $116 billion to $118 billion,   an increase   on the lower end after it previously saw $114 billion to $118 billion, and above the estimate $115.63 billion. It raised the lower   end of its   yearly capital expenditure ( Capex )   forecast to   a range   of $70 billion to $72 billion, up from between $66 billion to $72 billion previously and above the estimate $69.3 billion.   That marks the third time   this year the company has hiked   its   Capex   guidance.

Meta   saw   investments   making within   its ads and   organic   engagement initiatives   next year   will   enable it   to maintain   the strong revenue growth   in 2026, and it requires   aggressive investment   to   meet its   compute needs   both   by   building its own   AI   infrastructure   and contracting with third party cloud providers.

Accordingly,   Meta   anticipated   further upward pressure   on   its Capex   and expenses plans in   the coming year.   The Capex   will be "notably larger in   2026 than 2025"   and   total expenses will grow   at a "significantly faster   percentage rate in 2026 than   2025",   Meta   said in a press   release. It   noted the expense growth is   driven primarily by infrastructure costs, including incremental cloud expenses and depreciation.

In the meantime,   Meta cautioned   against legal and regulatory   risks, including the increasing headwinds in the European Uion   and the U.S. that could significantly impact our business and financial results. In the EU, Meta   continue to engage constructively with the European Commission on its   Less Personalized Ads offering. Tough it cannot rule out the Commission imposing further changes to that offering that could have a significant negative impact on its   European revenue, as early as this quarter. In the U.S., a number of youth-related trials are scheduled for 2026, and may ultimately result in a material loss.