Meta issues new non-voting shares for AI

Meta confirmed on Wednesday that it will create a new class of non-voting stock to help finance its massive artificial intelligence buildout. This announcement came during the company's third-quarter earnings call, where executives detailed a strategy to raise capital without altering the voting power of existing shareholders. The move provides the tech giant with a flexible tool to continue its aggressive investment in AI infrastructure and talent.

The news surfaced earlier in the day when Semafor reported that Meta was planning to issue shares that do not carry voting rights. Shortly after, Susan Li, the company's chief financial officer, verified the plans on the earnings call. She explained that the new capital stock will be distributed to all current shareholders through a stock dividend. This mechanism ensures that every investor receives a portion of the new class without needing to purchase additional shares at market price.

Li stated that the primary purpose of this new share class is to create a publicly traded instrument for raising funds. The company intends to use these shares for employee compensation, acquisitions, and other general corporate purposes. By doing so, Meta aims to preserve the voting influence of its Class A and Class B shareholders. This approach allows the company to maintain its founder-led structure while expanding its financial toolkit.

The new shares are designed to give Meta the flexibility to invest in the strong momentum it sees across its business, driven largely by AI. Li noted that this expanded funding capacity is crucial for supporting the company's growth trajectory. The structure ensures that the ownership dynamics of the company remain stable even as it issues new equity to meet its operational needs.

Financially, Meta delivered a strong quarter, exceeding Wall Street expectations. The company reported revenue of $64 billion, marking a 26 percent increase from the same period last year. However, this growth came with a significant rise in costs and expenses, which jumped 68 percent year-over-year. This surge in spending reflects the heavy investments the company is making in its technology stack and personnel.

The Reality Labs division, which handles Meta's augmented reality glasses, virtual reality headsets, and related software, continues to operate at a loss. While the losses are not as severe as they were previously, the division remains a drain on profits. In its earnings report, Meta projected that Reality Labs losses will narrow to between $18 billion and $19 billion, down from the levels seen in 2025. This improvement signals a slight stabilization in that specific segment of the business.

Meta has been heavily focused on AI over the past year, releasing several models including Muse Spark and Muse Glimmer earlier this year. In recent weeks, the company added Muse Wonder and Muse Spark Open, the latter being an open-weight model with publicly available parameters. Meta also launched Muse Code, a coding agent for software developers. At its Meta Connect event, the company introduced new avatars for its AI assistant, Meta Muse, aiming to make the technology more relatable and shareable.

The AI products appear to be gaining traction. Mark Zuckerberg, the company's CEO, reported that more than 10 million people in the United States and Canada have set up Muse personal agents in just a month and a half. He noted that growth has been strong, with the product ranking number one in the App Store nearly every day. Zuckerberg described the product as having clear product-market fit and said the company is now entering an operational phase focused on scaling the service to eventually serve billions of people.

Despite the strong performance, Meta faces ongoing regulatory and legal challenges. Li acknowledged that the company continues to monitor active matters that could impact its business and financial results. Specifically, she highlighted scrutiny regarding youth-related issues in several markets. The company has multiple youth-related trials scheduled in the coming months within the United States, which will require continued attention from legal teams.