The drop reflects a $9.89 billion charge tied to an August agreement with 52 U.S. state attorneys general to resolve litigation over teen mental health and social media.
That settlement provides for payments of up to about $18.59 billion.
Excluding the charge, Meta said quarterly operating income would have been $22.88 billion and diluted earnings per share $7.40.
CEO Mark Zuckerberg said the company hit major milestones toward "personal superintelligence for everyone," including launching Muse and Muse Wonder, which he called Meta's first frontier model.
Total costs and expenses rose 68% to $51.61 billion.
Capital expenditures, including principal payments on finance leases, were $34.91 billion, and free cash flow was negative $2.12 billion, with operating cash flow of $32.79 billion.
Meta now expects 2026 capital spending of $135 billion to $145 billion, narrowed from $130 billion to $145 billion, and raised its full-year expense outlook to $175 billion to $179 billion to include the legal charge.
It still expects 2026 operating income, excluding the charge, to exceed 2025.
The company said its AI investments are already delivering substantial added advertising revenue through stronger engagement, better recommendations and more efficient monetization.
Ad impressions rose 10% and the average price per ad rose 14%.
Meta guided fourth-quarter revenue of $73 billion to $76 billion and said it expects strong revenue growth through 2027, though it is not giving a full-year 2027 revenue outlook. Reality Labs, its virtual and augmented reality unit, lost $4.13 billion on $443 million of revenue; Meta expects 2026 losses of $18 billion to $19 billion, narrowing to around $15 billion in 2027 as spending shifts toward AI. The company also warned of youth-related scrutiny in several markets and a number of U.S. trials scheduled in the coming months.
Separately, Meta's board approved a new class of publicly listed, non-voting Class C common stock, effective January 19, 2027, pending a Delaware filing. Shareholders will receive a one-time dividend of one Class C share per Class A or Class B share, which Meta expects will make the Class A price reflect a two-for-one split without changing anyone's voting power. A special committee of independent directors said the new class could support capital raising, employee pay and possible acquisitions while keeping Zuckerberg in charge. Meta also signed a Founder Alignment Agreement with him covering his sales of the new shares and his service at the company.