Meta Spooked Wall Street | Weekend Intelligence #35
The past week was a reminder that enthusiasm for artificial intelligence comes at a price. Investors first returned to tech stocks, only for Meta’s increased investment ambitions to send them back to caution. Tesla showed it can surprise even without revenue growth. And Europe had its own worry: France, with its budget and political uncertainty, which rating agencies also turned their attention to this time.
Weekend Intelligence is an exclusive analytical report published once a week and available only to Bulios Black members. Members receive it automatically every Saturday morning by email—in full, including specific scenarios and market implications. You can get ongoing access to the report by joining Bulios Black.
Key points
Why the market punished Meta with a 7 percent drop despite revenue beating expectations
What is behind France’s 10-year yield at 5 percent, the first time since 2002
How Tesla managed its cash flow and what the committees mean for a possible merger with SpaceX
Why the U.S. week turned from a Dow record to the Nasdaq’s worst day since June
What to expect from Wednesday’s Fed, Thursday’s ECB and earnings from the biggest tech companies
Meta: capex of 135-145 billion USD, commitments of 825 billion and a 7% share-price drop
On Wednesday, Meta raised the lower end of its capital expenditure forecast for 2026 to 135–145 billion dollars from 130 billion, and paid the price on Thursday. The share price fell 6.98% to 648.85 dollars on volume of 40.6 million shares, compared with a 30-day average of 21.2 million. Revenue, meanwhile, rose 26% to 64.6 billion dollars, beating expectations of 63.3 billion.
The reaction was triggered not by the results, but by a regulatory filing. Meta put future lease and contractual obligations at around 825 billion dollars, up from nearly 700 billion reported in July. This includes 356 billion in lease agreements that have not yet commenced and 454.5 billion in non-cancellable contracts for cloud capacity, energy and hardware for Reality Labs.
The difference compared with capex is mechanical: the annual budget measures cash spent this year, while obligations measure capacity the company has already contracted for years ahead. Most of the leases do not yet appear on the balance sheet. On the other side are data-center operators, energy companies and cloud providers, for whom these contracts mean predictable revenue—and who base their own financing on them.
The market interpreted this as credit risk. Five-year CDS on Meta debt rose by as much as 8.9 basis points to around 119.3 basis points, according to ICE Data Services—the highest since these swaps began actively trading a year ago—and the company’s bonds weakened. Quarterly capex reached 34.9 billion dollars and free cash flow turned negative.
Concurrent moves in corporate governance have the same underlying rationale. The board approved a new class of publicly traded Class C common shares with no voting rights, via a two-for-one stock split; according to an October 21 filing, an independent committee warned that debt at the contemplated scale could damage the company’s ratings. Issuing shares would avoid that route without diluting Mark Zuckerberg’s voting control.
The income statement also included a one-off item. Meta booked 9.89 billion dollars related to an August agreement with attorneys general from 52 states over minors’ mental health, under which payments of up to 18.59 billion have been agreed. GAAP operating profit fell 37% to 12.99 billion and the margin dropped to 20% from 40% a year earlier. Total costs rose 68% to 51.6 billion dollars.
Selling pressure did not stop at a single stock: the Nasdaq fell 2.6% on Thursday, according to Reuters, its biggest drop since early June, and the move spilled over into credit spreads and government bonds. Fourth-quarter revenue guidance of 73–76 billion dollars is broadly in line with the consensus of 73.7 billion. The next test will be the form of financing—whether Meta turns to a Class C share issue or debt, and where CDS move next.
French 10-year yield at 5%: first time since 2002 and higher than Greece’s
On Wednesday, October 21, the yield on France’s 10-year OAT touched 5.002%—the first time since 2002. It fell back to 4.98% in the afternoon, up 6 basis points on the day. At the end of February it was around 3.2%, and this year alone it has added roughly 129 basis points, according to LSEG data. Behind the move is a combination of street unrest and a 2027 budget without a majority.