Meta Issues New Non-Voting Stock to Bankroll AI Expansion

Meta Platforms is introducing a novel financial instrument designed to fund its aggressive artificial intelligence strategy. As part of its third-quarter earnings report on Wednesday, the company confirmed plans to issue a new class of non-voting capital stock. This move allows the tech giant to secure funding without diluting the voting control held by its existing shareholders.

During the earnings call, Chief Financial Officer Susan Li detailed the structure of the new shares. She explained that the non-voting stock will be distributed to all current shareholders as a stock dividend. The primary objective is to create a publicly traded security that can be utilized for capital raising, employee compensation, and acquisitions. This approach preserves the voting power of existing Class A and Class B shares, maintaining the company's founder-led governance structure.

Li emphasized that this new funding tool provides the flexibility needed to invest behind the momentum currently driving the business. By separating voting rights from capital ownership, Meta aims to streamline its ability to deploy resources across its various AI initiatives. The strategy is intended to support the company's rapid expansion in a highly competitive technological landscape.

The financial backdrop for this move is strong, with the company reporting $64 billion in revenue for the quarter. This figure represents a 26% increase compared to the same period last year. However, the cost of growth is evident, as total costs and expenses surged by 68% year-over-year. Despite these rising expenditures, Meta continues to prioritize long-term investment in its core technologies.

The company’s Reality Labs division, which handles augmented and virtual reality hardware, remains in the red but is showing signs of improvement. Meta projects that losses for this segment will narrow from their 2025 levels, falling between $18 billion and $19 billion. This trend suggests a gradual path toward profitability for the hardware-focused business unit.

Meta has ramped up its AI product releases significantly over the past year. Recent launches include the Muse Spark and Muse Glimmer models, as well as the open-weight Muse Spark Open. The company also introduced Muse Code, a coding agent for developers, and new avatar lines for its AI assistant at its annual Connect event. CEO Mark Zuckerberg noted that growth is robust, with over 10 million people in the U.S. and Canada setting up personal agents in just six weeks. He stated that the product has achieved clear market fit and is now entering a phase focused on scaling to serve billions of users.

Despite the optimistic outlook, Li acknowledged that regulatory and legal challenges persist. The company is closely monitoring active matters that could impact its financial results. Specific scrutiny continues regarding youth-related issues in several markets, with multiple trials scheduled in the United States over the coming months.