Episode
Meta (META): Free Cash Flow Fell 91% While Revenue Grew 28% — Moat or Money Pit?
- Published
- Jul 30, 2026
- Duration seconds
- 934
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Summary
Meta Platforms, Inc. (META) Q2 2026 — Meta Platforms (META) reported Q2 2026 (quarter ended June 30, 2026) after the close on July 29: revenue $60.80B, +28% YoY (+27% constant currency), a beat — but diluted EPS fell 13% to $6.18, missing the Street by roughly a dollar, and operating margin collapsed from 43% to 31%. Total costs and expenses rose 55% to $42.03B, including $2.40B of legal charges and $1.18B of severance from the May headcount reduction; R&D alone rose 67% to $21.66B (35.6% of revenue). The number that moved the stock: capex was $31.08B in a single quarter (51% of revenue), leaving free cash flow of just $784M, down 91% from $8.55B. Full-year 2026 capex guidance narrowed to $130-145B (vs $72B spent in 2025), implying $79-94B in H2 alone. Meta bought back ZERO stock in Q2 and zero in H1 (vs $22.9B in H1 2025) and instead issued $24.9B of long-term debt, taking total debt to $83.7B against $90.3B of cash and securities — net cash of only ~$6.6B, down from ~$23B six months ago. Stock comp was $7.66B, +58%, while headcount FELL 1% to 75,472 (~$406k of stock per employee annualized vs ~$254k a year ago). Under-covered angles: US & Canada is 44% of revenue and grew 31.6% with price per ad +20% on only +9% impressions (genuine pricing power), while Asia-Pacific price per ad grew just 1% and Europe just 10% (DMA pay-or-consent drag); Reality Labs lost $4.62B on $431M of revenue, a wider loss than last year and roughly $97B of cumulative operating losses since 2019; and D&A of $6.36B (a ~$25B annual run-rate) must eventually climb toward the $137B annual capex rate — if depreciation were already there, this quarter's $18.8B of operating profit would be about $2B. Our owner-earnings DCF (maintenance capex charged at $45B/yr, stock comp expensed, 10.5%…