Meta to Issue Non-Voting Shares to Fund AI Infrastructure

Meta Platforms has formally announced the creation of a new class of non-voting capital stock, a strategic move designed to finance its aggressive expansion in artificial intelligence while preserving the voting power of its existing shareholders. During its third-quarter earnings call on Wednesday, the company confirmed that this new share structure will be distributed to all current investors through a stock dividend. This mechanism allows Meta to raise significant capital for AI development, employee compensation, and potential acquisitions without altering the voting dynamics of its founder-led governance structure.

Susan Li, the company’s chief financial officer, explained that the new shares are intended to provide greater financial flexibility. She stated that the goal is to create a publicly traded non-voting stock usable for general corporate purposes. By separating voting rights from economic interest in this new class, Meta aims to maintain its current control structure while expanding its funding tools. Li noted that this approach gives the company the agility to invest in the "unprecedented momentum" currently driving its business across multiple sectors.

The announcement comes alongside a strong financial performance for the quarter. Meta reported revenue of $64 billion, marking a 26% increase compared to the same period last year, which exceeded Wall Street expectations. However, the company’s expenses rose sharply, climbing 68% year-over-year. This significant increase in costs reflects the substantial investment the company is making in its infrastructure and product development, particularly in its AI initiatives.

While the core business remains profitable, Meta’s Reality Labs division continues to operate at a loss, though the deficit is narrowing. The division, which develops augmented reality glasses and virtual reality headsets, is expected to see its losses shrink from 2025 levels to a range of $18 billion to $19 billion in the coming period. This improved trajectory suggests that the heavy spending in the metaverse sector is beginning to yield more efficient results, even as it remains a drain on overall profitability.

Over the past year, Meta has accelerated its AI strategy with the release of several key models, including Muse Spark and Muse Glimmer. Recently, the company launched Muse Wonder and Muse Spark Open, the latter being an open-weight model that allows external developers to access and build upon its underlying parameters. Additionally, Meta introduced Muse Code, a specialized agent for software developers, and unveiled a new line of avatars for its AI assistant, Meta Muse, at its Connect event. These products are designed to make AI interactions more relatable and accessible to a broader audience.

CEO Mark Zuckerberg highlighted the rapid adoption of these new tools during the earnings call. He reported that more than 10 million people in the United States and Canada have set up personal agents using Muse in just six weeks. Zuckerberg described the product as having achieved clear product-market fit, stating that the company is now entering a phase focused on operational scaling. He expressed confidence that the service will eventually serve billions of users, indicating a long-term growth trajectory for the platform.

Despite the strong product momentum, the company acknowledged ongoing regulatory and legal challenges that could impact future financial results. Li noted that Meta is closely monitoring active legal matters, particularly those related to youth usage in various markets. The company has several youth-related trials scheduled in the United States in the coming months, which may introduce additional costs or operational changes as it navigates the evolving regulatory landscape.