Meta just posted a blockbuster revenue quarter — and watched nearly $10 billion of it get swallowed by legal costs. The social media giant’s $18 billion nationwide settlement with state attorneys general landed on its third-quarter 2026 earnings like a meteor, and Wall Street barely flinched.
Mark Zuckerberg (Credits: Variety)
The Numbers Behind the Quarter
Meta’s revenue for the quarter hit $64.6 billion, up 26% year over year, driven by higher advertising spend and continued growth in its family of apps. Net income came in at $9.86 billion, up 264%, with earnings per share of $3.83.
That EPS figure missed analyst expectations — LSEG-polled analysts had expected revenue of $63.4 billion and EPS of $5.46. The shortfall traces directly to the $9.89 billion litigation charge Meta booked in the quarter, tied to its August agreement with 52 U.S. state attorneys general over litigation concerning teen mental health and social media. Total payments under the agreement could reach approximately $18.59 billion, paid out over a 10-year period.
Meta noted that excluding the charge, operating income would have been $22.88 billion and diluted EPS would have been $7.40.
Why Wall Street Shrugged
Despite the earnings miss, the market’s reaction was muted. Analysts largely treated the settlement as a one-time charge that wouldn’t recur at the same scale, focusing instead on the strength of the top line: ad impressions rose 10%, the average price per ad climbed 14%, and family daily active people averaged 3.64 billion in September, up 3%.
On the settlement itself, the deal — struck during active trial proceedings — forces Meta to overhaul how Instagram and Facebook operate for minors, including daily usage limits and “nighttime blocks” for teen accounts, tighter age verification, and new parental monitoring tools. Roughly $12.7 billion of the total is due to participating states outright; the remaining $5.3 billion is contingent on rivals YouTube and TikTok adopting comparable youth-safety changes.
CEO Mark Zuckerberg struck a confident tone: “This quarter, we achieved major milestones on our path to delivering personal superintelligence for everyone… Our investments are paying off, our core business is strong and we are seeing momentum overall.”
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Source: Variety — read the full story there.