Money · Explainer
Meta beat earnings and rallied; Tesla beat earnings and fell — what split them
After the closing bell on Wednesday, October 21, 2026, both Meta and Tesla beat Wall Street's revenue and earnings estimates — and then went in opposite directions. Meta rallied more than 3% in after-hours trading while Tesla fell 2–3%+, leaving people searching "why is Tesla stock down" and "what did Meta announce." Here are the actual numbers and the one question splitting them: what all this AI spending is doing to profits.
Meta: a record quarter, minus a $9.89 billion charge
Meta reported third-quarter revenue of $64.6 billion, up 26% from a year earlier — its highest ever — beating the roughly $63.3 billion consensus, according to the WEEX TradFi Daily market wrap. But reported (GAAP) earnings per share came in at just $3.83 — because of a $9.89 billion one-time legal-settlement charge tied to the company's August 2026 settlement with 52 state attorneys general over social-media-addiction claims, as AI Stock Wire's earnings coverage details. Excluding that charge, adjusted EPS was about $7.40, well above expectations, with ad prices up 14%.
Three things investors took away from the rest of the report:
- Q4 guidance of $73–76 billion — the $74.5 billion midpoint topped the street's roughly $73.7 billion estimate, per CNBC reporting cited by TradingView.
- 2026 capital expenditure narrowed to $135–145 billion (from $130–145 billion), with $34.91 billion spent in Q3 — AI data-center buildout, but "better controlled than feared," TrendInTech's FAQ notes.
- A new non-voting Class C stock that works like a two-for-one stock split, per AI Stock Wire.
Tesla: the top lines beat, the bottom line shrank
Tesla reported revenue of $28.05 billion, roughly flat from a year earlier but ahead of estimates, and adjusted EPS of $0.48 against the $0.45 FactSet consensus, AI Stocks Plus reports. The GAAP picture was uglier: net income fell about 43% to $787 million, pressured by higher spending on R&D, AI and robotics, and GAAP diluted EPS dropped to $0.22 from $0.39 a year earlier, the WEEX wrap details. Operating expenses rose roughly 39%, and free cash flow fell roughly 50% year over year to $1.53 billion. The bright spots: the operating margin recovered to 2.6% from 1.4% in Q2, and active Full Self-Driving subscriptions grew 67% to 1.74 million, per AI Stock Wire.
Tesla also cut its 2026 capital-spending forecast to about $20 billion (from more than $25 billion), and Elon Musk said Tesla and SpaceX have formed a special committee to study a possible merger — with no agreed terms and no guarantee of a deal, according to MoneyCheck's market coverage.
So why did one pop and one drop?
A beat isn't always enough — it depends on what was already priced in. AI Stocks Plus notes options markets had priced in roughly a ±7.3% move for Tesla and ±7.1% for Meta: Tesla had already run up 3.41% into the print, so a modest beat triggered "sell the news," while Meta barely moved during the regular session (+0.47%), leaving room for a clean upside reaction. Both after-hours moves stayed well inside the expected ranges.
The deeper split is the market's question of the moment: is AI spending paying off? Meta's ads business is visibly monetizing AI — revenue up 26% while spending came in "better controlled than feared." Tesla's AI and robotics ambitions are visibly costing it — operating expenses up ~39%, net income down 43%. The same earnings night even carried into the next morning: TrendInTech's FAQ cites CNBC reporting that S&P 500 futures fell ~0.4–0.5% and Nasdaq-100 futures ~0.7% Thursday morning as investors chewed over the AI-spending question.
Also on the same night
It was a crowded evening: IBM also beat, with adjusted EPS of $2.95 on $17.1 billion in revenue, OQLIV reports — and SpaceX reported Tuesday night with $14.6 billion in revenue and $4.4 billion in net income, per AI Stock Wire.
Sources: WEEX TradFi Daily (Meta revenue/EPS beat, Tesla net-income decline, after-hours moves); AI Stock Wire (Meta's $9.89B charge and $7.40 adjusted EPS, Q4 guidance, Class C split, Tesla's FSD/free-cash-flow details, SpaceX results); AI Stocks Plus (priced-in move analysis, consensus numbers); TrendInTech (capex figures, Thursday futures); MoneyCheck (Tesla capex cut, possible SpaceX merger committee); OQLIV (IBM beat). After-hours prices move and may differ from the figures above; estimates cited are the consensus figures those outlets reported. Information only, not financial advice.