Meta Creates New Non-Voting Stock To Fund AI Expansion

Meta is changing how it raises money for its massive artificial intelligence push, a move that will introduce a new type of stock to the market. The company announced on Wednesday that it will create a new class of non-voting capital stock. This change means that new investors can buy into Meta's growth without gaining a vote on corporate decisions. For existing shareholders, the new shares will be distributed as a dividend, ensuring they benefit from the capital raising without diluting their voting power.

During the earnings call, CFO Susan Li confirmed the details of this financial strategy. She explained that the goal is to create a publicly traded non-voting stock that can be used for capital raising, employee compensation, and acquisitions. Li noted that this approach preserves the voting power of the existing Class A and B shareholders. This structure allows the company to maintain its founder-led governance model while expanding its funding tools. The flexibility provided by these new shares is intended to support the significant momentum the company sees across its various business units, particularly those driven by AI.

The announcement coincided with the release of Meta's third-quarter earnings, which showed a strong performance. The company reported revenue of $64 billion, marking a 26 percent increase from the same period a year ago. While the top-line numbers beat Wall Street expectations, the company also saw a significant rise in costs and expenses. These expenses jumped by 68 percent year-over-year, reflecting the heavy spending required to build out its new AI infrastructure and support its expanding product lines.

Despite the overall growth, the Reality Labs division continues to post losses. This division is responsible for Meta's augmented reality glasses, virtual reality headsets, and related software. However, the company expects these losses to narrow compared to the previous year. Meta stated that it anticipates Reality Labs losses to shrink to a range between $18 billion and $19 billion for the current year, down from its 2025 levels. This trend suggests that while the division is still burning cash, the pace of losses is slowing as the company matures its hardware and software offerings.

Meta has been aggressively developing its AI capabilities over the past year. The company has released several new models, including Muse Spark and Muse Glimmer earlier this year. More recently, it introduced Muse Wonder and Muse Spark Open. The latter is an open-weight model, meaning its underlying parameters are publicly available for external developers to use and build upon. Meta also launched a coding agent called Muse Code to assist software developers. At its annual Meta Connect event, the company unveiled a new line of cute avatars for its AI assistant, Meta Muse, aiming to make the technology feel more relatable and accessible to a broader audience.

The company believes its AI products are resonating with users. CEO Mark Zuckerberg highlighted that more than 10 million people in the U.S. and Canada have set up personal agents using Muse in just a month and a half. He noted that the growth has been strong, with the app ranking number one in the App Store on almost every day during that period. Zuckerberg stated that the product now has clear market fit and is entering a new operational phase focused on scaling. He expressed confidence that the service will eventually serve billions of people as it expands its reach.

While the focus is on AI and growth, Meta is not ignoring potential challenges. The company acknowledged that several regulatory and legal issues remain active. Li stated that the firm continues to monitor these matters, which could significantly impact its business and financial results. Specifically, the company noted ongoing scrutiny regarding youth-related issues in various markets. There are also several youth-related trials scheduled in the United States in the coming months. These legal proceedings will require continued attention and resources from the company's legal team.

The creation of the new non-voting stock class is a strategic move to balance aggressive investment with corporate control. By separating voting rights from economic interest in this new class of shares, Meta can raise substantial capital for its AI initiatives without ceding more voting control to new investors. This approach allows the company to continue its ambitious buildout while maintaining the governance structure established by its founders. As the company moves forward, the success of this financial strategy will likely be measured by its ability to sustain its AI growth and manage its expanding costs.

The next few months will be critical for Meta as it navigates its legal challenges and continues to scale its AI services. The company plans to use the new stock to fund acquisitions and compensate employees, ensuring it has the talent and assets needed to stay competitive. With its AI products showing strong user adoption and its core revenue growing, Meta appears confident in its current trajectory. However, the high expenses and ongoing legal scrutiny suggest that the company will need to manage its resources carefully to ensure long-term sustainability.