Meta Platforms Q3 Revenue Climbs 26%; Shares Top $600 Sparks Split Speculation
Meta Platforms posted Q3 revenue of $51.2 billion (up 26% YoY) and adjusted EPS of $7.25 (up 20%), backed by 3.5 billion daily users and engagement gains of 5% on Facebook and 10% on Threads. Trading above $600 with a 28x earnings valuation versus 31x peers, a 2026 stock split appears likely.
1. Meta’s Capex-Driven Operating Leverage
Meta Platforms has embarked on one of the largest capital expenditure cycles in the hyperscaler universe, investing over $40 billion in data centers and network infrastructure since 2023. These outlays have translated directly into improved operating leverage, as every additional dollar spent on R&D and server capacity has driven higher average revenue per user (ARPU). In the third quarter, the company reported that AI-powered algorithm optimizations boosted ARPU by 12%, underscoring how its scale investments feed through rapidly to the bottom line.
2. Robust Revenue and Earnings Growth Fueled by AI
In its latest quarterly results, Meta posted 26% year-over-year revenue growth and a 20% increase in adjusted earnings per share, driven primarily by the integration of generative AI into its ad targeting and content recommendations. Engagement metrics confirm the impact: daily time spent on Facebook ticked up 5% while Threads usage rose 10%. Management forecasts continued mid-20s revenue growth over the next four quarters as AI enhancements attract greater advertiser spend.
3. Attractive Valuation Relative to Peers
Despite its rapid expansion, Meta trades at approximately 21 times forward earnings, below the S&P 500 average of 22.4 times and well under the 31 times multiple of its largest tech peers. The market’s hesitancy reflects concerns about heavy AI infrastructure spending and uncertain returns, but the company’s combination of sector-leading margin expansion and double-digit top-line growth suggests a valuation misalignment that could correct as investors recognize its durable advertising franchise.
4. Stock Split Could Unlock Further Upside
Meta’s share price has more than quintupled since its IPO, yet the company has never executed a stock split. With a global daily user base exceeding 3.5 billion across Facebook, Instagram, WhatsApp, Messenger and Threads, and annual revenue surpassing $200 billion, a split now would enhance liquidity for retail and institutional holders alike. Historical data shows that companies announcing splits often outperform the market by over 1,300 basis points in the following year, suggesting a potential catalyst for additional share price appreciation.