THE APEX TIMES
The comments come as S&P Global Ratings maintained Meta’s AA- rating but revised its outlook to negative, citing expectations for large free operating cash flow deficits in 2026 and 2027.
Meta executives are arguing that the company’s core operations remain on solid footing, even as a major credit rating agency indicates rising downside risk. In a market report published Tuesday, Meta CEO Mark Zuckerberg said Meta’s “core business is strong,” pointing to continued momentum in engagement and ad demand while acknowledging broader uncertainty in the market.
The same report highlights S&P Global Ratings’ latest assessment of Meta’s credit profile. S&P kept Meta’s long-term issuer credit rating at AA-, but changed the outlook to negative, a announcement that the agency views the balance of risks as tilted toward weaker performance rather than stability.
S&P’s negative outlook was tied, at least in part, to expectations for large free operating cash flow deficits over the next two years. According to the report, S&P forecast a free operating cash flow deficit of $22 billion in 2026 and $71 billion in 2027. Free operating cash flow is a measure of how much cash a company generates from core operations after covering operating needs and capital expenditures, and a deficit means cash outflows are expected to exceed what operations and spending adjustments generate.
The market report also points to operating scale and recent growth. Meta’s third-quarter revenue rose 26% to $64 billion, a pace the company is using as evidence that its advertising business and related services are still expanding despite headwinds that have pressured profitability and investment plans in recent periods.
While the credit outlook decision may appear at odds with Zuckerberg’s “core business” framing, the disconnect is common when cash flow and credit risk hinge on longer-horizon spending plans and margins. Meta has been investing heavily in areas such as artificial intelligence infrastructure and other product development, and those commitments can weigh on cash flow even when near-term revenue growth remains healthy.
Meta operates across major consumer platforms including Facebook, Instagram, and WhatsApp, plus advertising services that help businesses reach users. In this sector, cash flow trajectories and credit metrics can be especially sensitive to the pace of capital spending and the operating margin needed to convert revenue growth into cash. Against that backdrop, S&P’s outlook change suggests the agency believes the gap between spending and cash generation could widen over time, even if the top line is growing.
Still, key specifics were not provided in the market report about what specific drivers led S&P to the expected 2027 deficit figure. For example, the report did not break down whether the projection assumed particular levels of capital expenditure, changes in operating expenses, or shifts in ad pricing and demand. It also did not include direct quotes from S&P’s analysts or the full rating rationale beyond the outlook and the cash flow deficit expectations.
Going forward, investors and analysts will likely focus on whether Meta can narrow the cash-flow gap implied by the projections and how quickly it translates revenue growth into durable free operating cash flow. The company’s next earnings update, along with any commentary around spending, capital intensity, and efficiency improvements, will be central to assessing whether S&P’s negative outlook persists or is reversed.
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