Why Meta Platforms Stock Took a Hit Today

Shares of Meta Platforms ( META -7.20% ) stumbled out of the gate on Thursday, falling as much as 7.6%. As of 1:10 p.m. ET, the stock was still down 7.2%.

The catalysts that sent the social media and artificial intelligence (AI) company lower were its financial results and a change to its stock structure. Image source: The Motley Fool. The good news For the third quarter, Meta generated revenue that grew 26% to $64.6 billion, driven by robust advertising.

This drove diluted earnings per share (EPS) of $3.83, up 265%. However, the company took a $9.9 billion charge related to its recent legal settlement regarding teen social media addiction. Excluding this charge, EPS would have been $7.40.

For context, analysts' consensus estimates called for revenue of $63.4 billion and EPS of $5.46, so if not for the charge, Meta would have easily surpassed expectations. Other metrics were equally robust. The company's daily active users rose 3% year over year to 3.64 billion, while ad impressions and average price per ad increased 10% and 14%, respectively. $647.32 -$50.20 (-7.20%) NASDAQ · As of 1:27 PM ET 10/22/26 The not-so-good news However, a change to Meta's stock structure was the headline.

The company announced that its board of directors had established a new class of common stock -- non-voting Class C shares -- which will be effective Jan. 19, 2027. The company created this new class of shares to raise capital for its rising AI expenses, employee compensation, and potential acquisitions.

Meta will also use this new class of shares to effect a 2-for-1 stock split early next year, though the timing is still up in the air. The use of non-voting stock allows CEO Mark Zuckerberg to retain control of the company with a more than 60% voting interest thanks to his ownership of Class B shares, which carry 10 votes each, while regular Class A shares carry one vote each.

In other bad news, New Mexico hit Meta with a record $25 billion judgment for failing to protect user privacy in connection with the 2018 Cambridge Analytica scandal. Meta has said it will appeal. At 22 times earnings, Meta is well below its 3-year average multiple of 27.

While the stock is certainly cheap, investors should consider the risk associated with its legal exposure.