Meta creates new non-voting stock to fund AI ambitions

Meta has long been known for its aggressive spending on new technology, but its latest financial move signals a significant shift in how it plans to bankroll its artificial intelligence strategy. The company is introducing a new type of equity that will help cover the steep costs of its AI buildout without diluting the control of its existing investors.

The news broke on Wednesday when the company released its third-quarter earnings. Semafor initially reported that Meta was considering issuing non-voting shares to raise capital. During the subsequent earnings call, the company officially confirmed the plan. Susan Li, the chief financial officer, explained that the firm intends to create a new class of non-voting capital stock. This new share type will be distributed to all current shareholders as a stock dividend.

Li detailed the specific goals behind this financial instrument. She stated that the new class of shares is designed to be a publicly traded non-voting stock. This will allow the company to use it for raising capital, compensating employees, and making acquisitions. A key benefit is that it preserves the voting power of the existing Class A and B shareholders. This structure helps Meta maintain its founder-led governance model while expanding its funding tools.

The financial results for the quarter were strong, with the company beating Wall Street expectations. Revenue climbed 26% year-over-year to reach $64 billion. However, the company is spending heavily to support its growth. Costs and expenses jumped 68% during the same period. This increase reflects the significant investment required to support the rapid expansion of its AI initiatives.

The Reality Labs division, which handles AR glasses, VR headsets, and related software, continues to operate at a loss, though the bleeding has slowed. The company expects these losses to shrink from 2025 levels, landing between $18 billion and $19 billion. Meanwhile, the AI side of the business is showing strong momentum. Over the past year, Meta has released several models, including Muse Spark, Muse Glimmer, Muse Wonder, and Muse Spark Open. It also launched Muse Code, a coding agent for developers.

At its Meta Connect event earlier this year, the company introduced a new line of cute and cuddly avatars for its AI assistant, Meta Muse. This move aimed to make the technology feel more relatable and shareable. The strategy appears to be working. CEO Mark Zuckerberg 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. He added that the product has been number one in the App Store almost every day.

Zuckerberg said the company is now entering a new operational phase focused on scaling the product. He expressed confidence that the service can eventually serve billions of people. However, he acknowledged that challenges remain. Li mentioned that the company is monitoring active legal and regulatory matters. Specifically, there is ongoing scrutiny regarding youth-related issues in several markets, with several trials scheduled in the United States in the coming months.

This new stock offering provides Meta with the flexibility to invest in the unprecedented momentum it is seeing across its business. By separating voting power from capital raising, the company can pursue its ambitious AI roadmap while keeping its current leadership structure stable. The success of this strategy will depend on how well the new shares are received by investors and how quickly the AI products can scale to meet their ambitious goals.