Meta beats revenue; Tesla cuts annual sales target

Meta Platforms reported third-quarter revenue that exceeded expectations and provided current-quarter guidance above Wall Street estimates, while Tesla set a lower annual sales target for the end of the decade. The diverging results moved both companies' shares in extended-hours trading on Thursday.

U.S. stock futures pointed lower before the open. By 03:08 ET, S&P 500 futures had fallen 75 points, or 1.0%, Nasdaq 100 futures had dropped 510 points, or 1.7%, and Dow futures had retreated 283 points, or 0.5%. Deutsche Bank analysts noted that the decline in Nasdaq futures suggested not all investors were reassured by recent results, even as strong performances from SpaceX and Super Micro Computer in the prior session had helped ease some concerns about the sustainability of the artificial intelligence trade.

Meta shares rose in after-hours trading following the announcement of higher-than-anticipated quarterly revenue and plans to create a new class of nonvoting stock to raise capital for AI ambitions. CEO Mark Zuckerberg stated on a post-earnings call that roughly a quarter of users who set up Meta's Muse AI assistant use it on any given day, particularly for shopping. He added that the company is aiming to create a large-scale Muse network, despite the app being blocked on some websites such as Amazon.com. Truist Securities projections cited by The Wall Street Journal suggest Muse could add $28.5 billion in incremental revenue by 2030.

Meta projected current-quarter revenue between $73 billion and $76 billion, a range where the upper limit surpassed analyst expectations. The company also refined its capital expenditure outlook to $135 billion to $145 billion, lifting the previous low-end estimate of $130 billion.

Tesla shares fell after-hours as the company set a goal of 5 million annual vehicle sales by the end of the decade, a reduction from a previous guidance of 20 million units. Musk has focused Tesla's strategic pivot on AI and robotics, stating hopes to start shipping Optimus humanoid robots to corporate customers by the end of 2027. Tesla reported flat quarterly revenue and a 4% drop in net income to $1.7 billion. Cash flow remained positive in the third quarter, and the company predicted it would spend around $20 billion in capital expenditures this year, compared to a prior estimate of $25 billion.

Reuters reported that Elon Musk's public endorsement of a potential merger between SpaceX and Tesla has raised concerns among insiders about regulatory scrutiny. During SpaceX's post-earnings call, Musk said independent committees were exploring a merger that could be valued at $3.5 trillion, calling it a good idea but warning it was far from certain. Insiders expressed concern that the disclosure could lead to questions about how well Tesla's shareholder interests would be represented, drawing parallels to the litigation following Tesla's 2016 acquisition of SolarCity.