Shares of Meta fell by about six per cent on Thursday after the social media giant reported negative free cash flow in its third-quarter earnings and raised the lower end of its full-year capital expenditure forecast.
The company’s five-year credit default swap spreads also climbed to record highs on Thursday, signalling growing concerns among investors about its credit risk as it ramps up spending on artificial intelligence.
Meta said it now expects full-year capital expenditure to range between $135bn and $145bn, raising the lower end of its previous forecast of $130bn to $145bn.
Meta recorded negative free cash flow of $2.12bn in the third quarter, highlighting the financial pressure from its rising investments.
The company disclosed on Wednesday that it planned to create a new class of non-voting Class C common stock as part of efforts to preserve its “founder-led structure” and give it greater flexibility to finance its growth.
Meta also disclosed that Chief Executive Officer Mark Zuckerberg could leave California if the proposed “California Wealth Tax” is passed.
According to a filing with the US Securities and Exchange Commission, Zuckerberg could face a significant tax bill running into billions of dollars based on his ownership of Meta shares if the proposed measure becomes law.
