New Stock Class: Meta's Financing Play for AI

Meta is gearing up to finance its aggressive expansion into artificial intelligence by introducing a brand-new category of shares. The plan, detailed alongside the company's third-quarter earnings release on Wednesday, involves the creation of a non-voting stock class designed to raise capital without altering the company's existing control structure.

During the earnings call, CFO Susan Li confirmed the initiative. She stated that the company will “create a new class of non-viving capital stock, which will be distributed to all existing shareholders through a stock dividend.” Li further clarified that this specific stock class is being established “for the purpose of creating a publicly traded non-voting stock usable for capital raising, employee compensation, acquisitions, and other general corporate purposes while preserving the voting power of existing Class A and B shareholders.”

Li emphasized that this financial maneuver is intended to maintain Meta’s current “founder-led structure.” By doing so, the company aims to expand its “funding tools and give us flexibility to invest behind the unprecedented momentum we’re seeing across every part of our business, driven by AI.”

The financial backing for such moves comes from a strong third quarter. Meta reported revenue of $64 billion, marking a 26% increase from the previous year and beating Wall Street projections. However, the surge in AI investment is reflected in the spending figures, with costs and expenses rising 68% year-over-year.

Despite the heavy spending, some divisions are stabilizing. Reality Labs, the unit responsible for Meta’s AR glasses and VR headsets, continues to post losses, but the company projects a reduction. The earnings report anticipates losses for the division will shrink from 2025 levels to a range between $18 billion and $19 billion.

The capital is being funneled into a rapidly growing ecosystem of AI tools. Over the past year, Meta has released several models, including Muse Spark and Muse Glimmer, alongside new additions like Muse Wonder and the open-weight model Muse Spark Open. The company has also rolled out Muse Code for developers and a new line of avatars for its AI assistant, Meta Muse.

Adoption numbers appear to be trending upward. During the call, CEO Mark Zuckerberg reported that “in just a month and a half, more than 10 million people in the U.S. and Canada have set up Muse personal agents.” He added that “growth continues to be strong, and we have been number one in the App Store almost every day,” characterizing this as a “more operational phase that is focused on scaling it.”

Looking ahead, the company is watching external factors that could impact these plans. Li noted that “we continue to monitor active legal and regulatory matters that could significantly impact our business and financial results,” citing scrutiny regarding youth issues in several markets and upcoming youth-related trials in the United States.