Meta Plans New Non-Voting Shares to Fund AI Expansion

Meta has announced a significant shift in its corporate finance structure by creating a new class of non-voting stock. This move is designed to generate the capital necessary for the company’s aggressive expansion into artificial intelligence. For existing investors, the new shares will be distributed as a stock dividend, ensuring they receive a portion of the new instrument without diluting their current voting power.

During its third-quarter earnings call on Wednesday, Meta confirmed that it intends to use this new equity for various corporate functions. Chief Financial Officer Susan Li explained that the shares will serve as a tool for raising capital, compensating employees, and facilitating acquisitions. By issuing non-voting stock, the company aims to preserve the voting control held by its current Class A and Class B shareholders, thereby maintaining its established founder-led governance structure.

The decision comes alongside a strong financial performance for the quarter. Meta reported revenue of $64 billion, representing a 26% increase compared to the same period last year. This revenue growth exceeded Wall Street expectations. However, the company’s costs and expenses also saw a substantial rise, climbing 68% year-over-year, reflecting the heavy investment required to support its new initiatives.

The creation of this new stock class is directly tied to Meta’s rapid progress in AI. Over the past year, the company has launched several models, including Muse Spark, Muse Glimmer, and the open-weight Muse Spark Open. It also introduced Muse Code, a coding agent for developers, and announced new avatar options for its AI assistant, Meta Muse, at its recent Connect event. These products appear to be gaining significant traction in the market.

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

Despite the strong AI momentum, Meta’s Reality Labs division continues to operate at a loss, though the deficit is narrowing. The company expects the division’s losses to shrink from their 2025 levels to between $18 billion and $19 billion. This division handles Meta’s augmented reality glasses, virtual reality headsets, and related software.

Li indicated that the new funding tools will provide the flexibility needed to invest behind the momentum seen across the business, which she attributed largely to AI. The non-voting shares are intended to be a publicly traded instrument, allowing the company to access capital markets without altering the balance of voting power among existing stakeholders.

The company also acknowledged ongoing challenges related to legal and regulatory scrutiny. Li stated that Meta is monitoring active matters that could impact its financial results, including increased scrutiny on youth-related issues in several markets. Several trials concerning these issues are scheduled to take place in the United States in the coming months, adding a layer of uncertainty to the company’s otherwise strong financial outlook.