Meta Confirms Plan for New Non-Voting Stock Class to Bankroll AI Expansion

Meta has officially confirmed it will create a new class of non-voting capital stock to help finance its aggressive expansion into artificial intelligence. The announcement came during the company's earnings call on Wednesday, following initial reports from Semafor that the firm was exploring this financial instrument. This move appears designed to fund substantial new investments while keeping control firmly in the hands of existing shareholders.

Susan Li, the company's chief financial officer, outlined the mechanics of the plan during the call. She stated that the new shares will be distributed to all existing shareholders via a stock dividend. Li explained that the goal is to establish a publicly traded non-voting stock that can be used for capital raising, employee compensation, and acquisitions. Crucially, this structure is intended to preserve the voting power of current Class A and B shareholders, thereby maintaining the company's founder-led governance model.

Li noted that this new funding tool provides the flexibility needed to invest in what she described as unprecedented momentum driven by AI across the business. While the strategy sounds straightforward, it raises questions about how investors will value these non-voting shares compared to the traditional equity that comes with a say in corporate decisions. The move suggests Meta intends to tap into public markets more deeply without altering the current balance of power among its leadership and major holders.

The push for additional capital arrives alongside strong financial results for the third quarter. Meta reported revenue of $64 billion, a 26% increase from the same period last year. This performance beat Wall Street expectations. However, the revenue growth came with a significant cost increase, with expenses rising by 68% year-over-year. Such a steep jump in spending highlights the heavy financial commitment the company is making to its technology roadmap.

The division responsible for augmented and virtual reality hardware, Reality Labs, continues to operate at a loss, though the bleeding has slowed. The company expects these losses to narrow from their 2025 levels to a range between $18 billion and $19 billion. This persistent deficit in the metaverse division contrasts with the reported success of its newer AI initiatives, which seem to be the primary driver for the new stock issuance.

Meta has released several AI models in the past year, including Muse Spark and Muse Glimmer. More recently, it launched Muse Wonder and an open-weight model called Muse Spark Open. The company also introduced Muse Code, a tool for software developers, and unveiled a line of avatars for its AI assistant at its Meta Connect event. CEO Mark Zuckerberg claimed that more than 10 million people in the U.S. and Canada have set up Muse personal agents in just six weeks. He stated that the product is now in an operational phase focused on scaling to eventually serve billions of users.

Despite the optimism surrounding AI growth, Li acknowledged that regulatory and legal challenges remain on the horizon. She noted that the company continues to monitor active matters that could impact its financial results. Specific scrutiny regarding youth-related issues in several markets persists, with multiple trials scheduled for the coming months in the United States. These legal overhangs add a layer of complexity to the company's financial outlook as it moves forward with its new capital structure.