Meta shares drop after $16 billion hit on U.S. tax charge

The parent company of Facebook, Instagram and Whatsapp said that its net income would have reached $18.64 billion in the recent quarter had it not been for a one-time tax charge

Meta shares dropped more than 8% in after-hours trading Wednesday after the tech company reported a U.S. tax charge took a nearly $16 billion hit out of its quarterly profit.

The parent company of Facebook, Instagram and Whatsapp said that its net income would have reached $18.64 billion in the recent quarter had it not been for a one-time tax charge prompted by provisions in U.S. President Donald Trump’s “One Big Beautiful Bill Act.”

Quarterly revenue however exceeded analyst expectations at $51.2 billion, a 26% increase from the same period a year earlier.

Meta also notched up the forecast of how much money it expects to spend this year as it invests heavily in being a leader in artificial intelligence.

The company said it expects capital expenditures to tally somewhere between $70-$72 billion, at the higher end of a range it had previously disclosed.

Costs and expenses in the quarter were $30.71 billion, an increase of 32% from the same period last year, with some of that cost going to talent for Meta’s AI efforts.

I am very focused on establishing Meta as the leading frontier AI Lab, building personal super intelligence for everyone and delivering the app experiences and computing devices that will improve the lives of billions of people around the world, chief executive Mark Zuckerberg said on an earnings call. We’re heads down, developing our next generation of models and products.

Meta’s Family of Apps segment, which includes Facebook, Instagram, WhatsApp and Messenger, saw daily active users reach 3.54 billion in the quarter, up 8% from a year earlier.

Meta announced earlier this month that it will begin using people’s conversations with its AI chatbot to tailor ads and content they see on Facebook and Instagram.

Meta also recently showed off new smart glasses as it continued to bank on a lifestyle shift toward blending reality and virtual space despite the efforts inflicting heavy financial losses.