Meta’s revenue rose 26% to $64.6 billion in the third quarter of 2026, and its operating income fell 37% over the same three months, according to the company’s results release. Fundamental analysis of stocks is largely the work of explaining a gap like that one. This article reads Meta’s quarter the way an analyst would, starting at the top line and working down to the outlook. Along the way you’ll see which numbers analysts check first, how one large charge can distort a margin and why the guidance paragraph often gets more attention than the results above it.
Quick answer: Fundamental analysis of a stock means judging a company from its business results. Analysts start with revenue and what drove it, then check margins to see how much of each dollar of sales the company keeps, then read guidance for what management expects next. Share prices often react to the gap between those figures and what analysts had forecast.
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Where a Stock’s Numbers Come From
A US-listed company’s results arrive in a few pieces on the same day. The press release carries the headline figures, a summary income statement and the outlook, and it’s filed with the SEC as an exhibit to a Form 8-K. The Form 10-Q follows with the full quarterly accounts and management’s discussion, as Investor.gov explains. Then comes the earnings call, where executives answer analysts’ questions. Every figure gets compared with the consensus, the average forecast of the analysts who cover the company.
Revenue: Where Fundamental Analysis Starts
Growth Against the Forecast
Meta’s $64.6 billion was ahead of the $63.34 billion analysts expected, the Associated Press reported. The 26% growth was largely expected. The extra $1.3 billion wasn’t, and that’s the part a share price tends to react to.
Price and Volume
Analysts then split revenue growth into how much was sold and what it sold for. Nearly all of Meta’s revenue comes from advertising. Ad impressions rose 10% from a year earlier, and the average price per ad rose 14%.
Higher prices suggest advertisers are competing harder for each slot. Growth from volume alone can mean more ads squeezed into the same feeds, and that has a ceiling. Meta’s quarter leaned on price, with daily users up a more modest 3% to 3.64 billion.
Margins in Fundamental Analysis of Stocks
Revenue says how much came in, and margins say how much of it stayed. Each margin is a slice of income divided by revenue, and each one strips out a different kind of cost.
| Meta, third quarter | 2026 | 2025 | Change |
|---|---|---|---|
| Revenue | $64.60 billion | $51.24 billion | +26% |
| Cost of revenue | $13.37 billion | $9.21 billion | +45% |
| Gross margin | 79.3% | 82.0% | -2.7 points |
| General and administrative | $14.86 billion | $3.51 billion | +323% |
| Operating income | $12.99 billion | $20.54 billion | -37% |
| Operating margin | 20.1% | 40.1% | -20.0 points |
Figures from Meta’s third-quarter 2026 results release. Margins calculated from the reported figures.
Gross Margin
Gross margin is revenue minus the direct cost of delivering the product, as a share of revenue. Meta’s cost of revenue grew 45% while revenue grew 26%. For a company building data centers at this pace, much of that cost tends to be running and depreciating servers, and it climbs as new capacity comes online.
Operating Margin
Operating margin also takes out research, marketing and administration. The SEC’s Beginners’ Guide to Financial Statements describes operating income as the figure before interest and income tax. Meta’s operating margin halved, and one line explains most of it. General and administrative costs rose by $11.3 billion, and $9.89 billion of that was a single charge linked to an August 2026 settlement with US state attorneys general over social media and teen mental health.
Net Income Can Mislead
Meta’s net income rose 264%, which looks spectacular until you check the year before. The third quarter of 2025 carried a one-time tax charge of about $16 billion. Growth measured against a depressed base looks bigger than the business delivered, which is one reason analysts lean on operating figures.
Worked Example: Adjusting Meta’s Margin for a One-Off Charge
Analysts often rebuild a margin without unusual items to see the business underneath.
- Reported operating margin: $12.99 billion of operating income on $64.60 billion of revenue gives 20.1%.
- Add back the charge: $12.99 billion plus $9.89 billion gives $22.88 billion.
- Adjusted operating margin: $22.88 billion divided by $64.60 billion gives 35.4%.
- Compare with last year: the third quarter of 2025 had an operating margin of 40.1%.
- Check costs on the same basis: costs without the charge were $41.72 billion, up 36% on a year earlier, while revenue grew 26%.
The charge explains about 15 of the 20 points the margin lost. The other 5 points come from costs growing faster than sales, and that part is more likely to carry into future quarters. Headcount fell 15% over the year to 66,775, which suggests most of the extra spending went on servers and data centers.
The method works for any company. Find the charge in the release, add it back, recalculate and compare with the same quarter a year earlier. Adjusted figures aren’t official accounting numbers, and it helps to check exactly what a company has left out.
Guidance and the Quarters Ahead
Guidance is management’s own forecast. The share price is a bet on the future, which is why the outlook at the end of a release often moves a stock more than the results.
| Meta guidance, October 2026 | Figure | Compared with |
|---|---|---|
| Q4 2026 revenue | $73 billion to $76 billion | Analyst forecast of $73.65 billion |
| Growth implied at the midpoint | About 24% | Q4 2025 revenue of $59.89 billion |
| 2026 capital expenditure | $135 billion to $145 billion | Previous range of $130 billion to $145 billion |
| 2027 revenue | No range given | Expects strong growth and continued heavy investment |
Figures from Meta’s results release, the Associated Press and Storyboard18.
Reading the Range
Analysts look at the midpoint first. Meta’s midpoint of about $74.5 billion sat above the $73.65 billion forecast, and the AP reported the shares rose 2.9% in after-hours trading. A midpoint under the forecast can weigh on a share even after a strong quarter.
Spending and Cash Flow
The capex line shows what a company plans to invest in buildings, servers and equipment. Meta spent $34.91 billion in the third quarter alone, and its free cash flow, the cash left after that spending, was negative $2.12 billion against positive $10.6 billion a year earlier. Heavy investment adds depreciation costs for years, the same pressure already showing in the gross margin.
Questions Stock Analysts Ask on Results Day
- Did revenue beat on price or volume: price-led growth tends to say more about demand
- Are costs outgrowing sales once one-offs are removed: that gap shows where margins are heading
- Where is the guidance midpoint against the forecast: this often sets the first move in the share price
- What is already in the price: a forward P/E compares the share price with expected earnings, and a high one leaves less room for disappointment
The SelfMSF Fundamental Analysis Guide shows how the same thinking applies to currencies and commodities. Interest rates also shape what investors will pay for future earnings, which our macro guide follows into every market. Meta is one of the largest companies in the S&P 500, and our index explainer shows why one set of results can move a whole benchmark.
How Results Day Can Move a Share CFD
A share CFD tracks the price of the underlying stock, and you don’t own the shares or get voting rights. Large US companies usually report after the market closes, and the reaction often shows up as a gap when trading reopens [CONFIRM: trading hours for US share CFDs]. Share CFDs are traded with leverage, and leverage increases both gains and losses.
Key Takeaways
- Fundamental analysis of stocks starts with revenue, then margins, then guidance, each judged against the analyst forecast.
- Splitting revenue growth into price and volume shows how much of it comes from stronger demand.
- One-off charges can distort operating margin and net income, and analysts rebuild both without them.
- Guidance often moves a share more than the quarter just reported.
- Capital spending and free cash flow show what a company is investing now and what it may cost later.
Frequently Asked Questions
How do you do fundamental analysis of a stock?
You start with the company’s latest results and compare revenue, margins and earnings with the same quarter a year earlier and with analyst forecasts. Then read the guidance and the earnings call for what management expects next. Most analysts finish with valuation, comparing the share price with expected earnings to judge how much growth the market already assumes.
What is a good operating margin?
A good operating margin depends on the industry. Software and online advertising companies often run margins above 30%, while supermarkets and airlines can operate on single digits. Analysts compare a company with its own history and its closest competitors. The direction of the margin over several quarters usually tells you more than one reading.
What is the difference between gross margin and operating margin?
Gross margin subtracts only the direct cost of making or delivering a product, such as materials or server costs. Operating margin also subtracts research, marketing and administration, the costs of running the wider business. A company can keep a high gross margin while its operating margin falls if its overheads grow faster than its sales.
What does guidance mean in an earnings report?
Guidance is a company’s own forecast for a coming period, usually given as a range for revenue, expenses or earnings. Analysts compare the midpoint of that range with their consensus forecast. Guidance above expectations can lift a share price after weak results, and cautious guidance can pull one lower after a strong quarter.