To The Moon

META Earnings Shock — Is This a Falling Knife or a Hidden Opportunity?

Meta’$Meta Platforms, Inc.(META)$  s latest earnings sent the stock plunging — a painful reminder that even trillion-dollar tech giants can stumble.

But before you rush to sell (or buy the dip), let’s unpack why the market reacted so violently — and whether the panic is justified.

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📉 Three Reasons Behind the Sell-off

1️⃣ EPS “crash” — seemingly disastrous headline

2️⃣ Capex surge — spending through the roof

3️⃣ Reality Labs — still a deep-red money pit

Now, here’s the truth behind each headline.

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1️⃣ EPS Collapse? It’s a Accounting Illusion

At first glance, Meta’s EPS of US $1.05 looked catastrophic versus Wall Street’s US $6.68 expectation.

But this “profit collapse” isn’t real. It came from a one-time, non-cash write-down of US $15.93 billion related to deferred tax assets.

In plain English: these are future tax credits that Meta once expected to use.

After the new U.S. corporate minimum-tax rule (effective 2025) capped how much credit large firms can claim, Meta had to mark down those unused credits — a bookkeeping requirement, not a cash outflow.

CFO Susan Li confirmed:

💵 No cash left the company

🔁 One-time only adjustment

✅ Future cash taxes will actually fall thanks to accelerated R&D and depreciation write-offs

Strip out this accounting charge, and Meta’s true EPS is US $7.25, beating estimates by +9% and up 19% YoY.

So, not a collapse — just an optical illusion.

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2️⃣ Capex Explosion — Pain Now, Power Later

Meta lifted FY 2025 capital-expenditure guidance from US $66–72 billion → US $70–72 billion, and hinted that FY 2026 could top US $100 billion.

That triggered fears of cash-flow drain (free cash flow fell from US $14.6 b → US $10.6 b YoY).

But context matters: every major AI player — Microsoft, Google, Amazon — is in a data-center arms race.

CEO Mark Zuckerberg put it bluntly:

> “We’d rather over-invest than miss the next platform shift.”

In AI infrastructure, under-spending means irrelevance.

And Meta can afford this aggression: its core ad engine (Facebook + Instagram + WhatsApp) still delivers ~40% operating margin.

Yes, near-term margins get squeezed, but each GPU and server added today fuels future AI tools, ad-targeting precision, and new revenue streams.

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3️⃣ Reality Labs — Still Bleeding Cash

The metaverse dream remains costly: US $4.4 billion loss this quarter, over US $70 billion cumulative since 2020.

However, the focus is shifting from virtual worlds to AI-powered wearables.

Ray-Ban smart-glasses sales tripled YoY, with the new “Display” model selling out.

Management even reassigned Reality Labs’ VP Vishal Shah to lead AI product management — clear evidence that Meta is pivoting toward AI hardware monetisation, not pure metaverse fantasy.

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💡 So — Catch the Knife or Step Aside?

This is where fundamentals meet philosophy.

If you doubt Zuckerberg’s vision, Meta now looks like a cash-burning empire obsessed with futuristic toys.

If you believe he’s building the next platform before others see it, then this sell-off is noise.

The core business — digital ads — remains a cash machine funding a decade-long bet on AI and wearables.

Meta’s short-term pain may be the price of long-term dominance.

So yes, this “falling knife” is sharp — but it’s also made of gold.

Handle with conviction, not emotion.

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📊 Stock: Meta Platforms (META)

💬 Do you believe Zuck is buying the future — or burning cash? Share your take below.

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