Meta had a strange first quarter of 2026 with revenue up sharply, user numbers down, and the company somehow doubling down on spending more money.
Let’s start with the money. Revenue hit $56.3 billion this quarter, up 33% from $42.3 billion the same time last year, which is the company’s fastest growth since 2021.
That’s pretty impressive, but Meta is also planning to spend between $125 and $145 billion in capital expenditures this year, a $10 billion increase from what it had previously projected.
The extra spending is being blamed on higher component prices and the cost of expanding data center capacity. CFO Susan Li admitted on the earnings call that Meta had “underestimated our compute demand in the past,” which is a polite way of saying they got caught short.
Then there’s the user problem. Meta’s “Family daily active people,” its catch-all metric that lumps together everyone using Facebook, Instagram, WhatsApp, and Messenger on any given day, fell by about 20 million compared to last quarter, settling at 3.56 billion.
Year-over-year, that number is still up about 4%, so the trend isn’t disastrous. That said, losing 20 million users in 3 months is still a notable drop.
Meta blames internet disruptions in Iran and Russia’s restrictions on WhatsApp. That’s plausible, but the bundled metric makes it impossible to know which platform actually took the hit. Conveniently, Meta doesn’t break out daily active users per app anymore.
There’s at least one other explanation worth considering. Reports suggest the quality of feeds on Meta’s platforms has been declining, with users getting served too much recycled, low-effort content.
Meta already seems to be responding, as Instagram’s recommendation algorithm is reportedly being updated to reduce the reach of content that is mostly reused from other sources without adding anything new.
It will also limit posts from sites that receive an unusually high share of their clicks from Instagram compared to the rest of the web.
On the AI side, Meta launched a new closed-source model called Muse Spark, built for use inside its actual products rather than as a research release. It now powers Meta AI across its apps, the standalone Meta AI app, and its website.
Meanwhile, Reality Labs, the division building VR headsets and smart glasses, lost $4.03 billion in just three months and has seen two rounds of layoffs since January.
Meta’s total headcount stood at 77,986 as of March 31, up 1% year-over-year but down 1% from the previous quarter, which the company described as “headcount optimization.”
Meta’s stock dropped more than 7% after the earnings release, which suggests investors aren’t entirely sold on the idea of spending $145 billion while users quietly drift away.
