Meta shares rise as ad growth and Muse launches lift outlook

Meta shares advanced 3.57% to $722.42 in after-hours trading after quarterly revenue reached $64.60 billion, up 26%. Mark Zuckerberg highlighted the launches of Muse and Muse Wonder, linking the models to Meta’s goal of delivering personal superintelligence. Advertising impressions increased 10%, while average prices per advertisement climbed 14%.

Rising expenses weighed on operating performance. Total costs and expenses jumped 68% to $51.61 billion, including a $9.89 billion litigation-related charge. Operating income fell 37% to $12.99 billion, and the operating margin declined to 20% from 40%. Net income nevertheless rose 264% to $9.86 billion, as the effective tax rate fell to 24% from 87%.

The legal charge followed an agreement with 52 attorneys general over teen mental health and social media litigation, calling for payments of up to approximately $18.59 billion. Excluding the charge, Meta calculated operating income would have reached $22.88 billion. Capital expenditures, including finance lease principal payments, totaled $34.91 billion, exceeding operating cash flow of $32.79 billion and leaving free cash flow at negative $2.12 billion.