Meta to Issue New Non-Voting Shares to Fund $64B AI Push

Meta Platforms is introducing a novel financial instrument to support its aggressive expansion into artificial intelligence. On Wednesday, the company confirmed it will create a new category of non-voting capital stock. This move is designed to raise funds for its massive AI infrastructure buildout while protecting the voting control currently held by its existing shareholders.

The announcement came alongside the release of the company's third-quarter earnings. During the subsequent earnings call, Chief Financial Officer Susan Li detailed the mechanics of the plan. She stated that the new shares will be distributed to all current shareholders as a stock dividend. Li explained that the primary goal is to establish a publicly traded, non-voting instrument that can be used for capital raising, employee compensation, and acquisitions.

Li emphasized that this structure is intended to preserve the voting power of the existing Class A and Class B shareholders. By keeping voting rights separate from the new equity class, Meta aims to maintain its founder-led governance structure. She noted that this addition to their funding tools provides the flexibility needed to invest in the significant momentum generated by AI across the company's various business units.

The financial results for the quarter were strong, exceeding Wall Street forecasts. Meta reported total revenue of $64 billion, representing a 26% increase compared to the same period last year. However, the company’s costs and expenses also saw a substantial rise, jumping 68% year-over-year. This increase in spending aligns with the heavy investment required for its AI initiatives.

While the overall financials were positive, Meta’s Reality Labs division continues to operate at a loss. This unit, which develops augmented reality glasses, virtual reality headsets, and related software, is still burning cash, though at a slower rate than in previous years. The company projected that the division's losses will shrink from 2025 levels, falling within a range of $18 billion to $19 billion.

Meta has accelerated its AI output over the past year. The company released several models, including Muse Spark and Muse Glimmer earlier this year. Recently, it added Muse Wonder and Muse Spark Open, the latter being an open-weight model with publicly available parameters that allow external developers to build upon it. Meta also launched Muse Code, a specialized agent designed to assist software developers with coding tasks.

At its Meta Connect event this year, the company introduced a new line of avatars for its AI assistant, Meta Muse. These characters are described as cute and cuddly, a design choice intended to make the technology feel more relatable and shareable. The strategy appears to be gaining traction, with strong user adoption reported so far.

CEO Mark Zuckerberg highlighted the rapid growth of these tools during the earnings call. He noted that in just six weeks, over 10 million people in the U.S. and Canada have set up personal agents using Muse. Zuckerberg stated that the product has achieved clear product-market fit and is now entering a phase focused on scaling operations to eventually serve billions of users.

Despite the strong growth metrics, the company acknowledged ongoing regulatory and legal challenges. Li mentioned that Meta is monitoring active matters that could impact its financial results. Specifically, she pointed to increased scrutiny regarding youth-related issues in several markets. The company has several youth-related trials scheduled in the United States in the coming months.

The creation of this new stock class represents a significant shift in how Meta manages its capital structure. By decoupling voting rights from equity ownership for this new tranche, the company can raise the substantial capital required for AI development without altering the existing balance of power among its current shareholders. This approach allows Meta to continue its heavy investment in technology while maintaining its current leadership structure.