Meta's AI Funding Strategy: A New Stock Class

Meta is developing a new mechanism to finance its extensive artificial intelligence ambitions, which involves issuing a new type of stock. On October 21, during its third-quarter earnings report, the company confirmed plans to create a distinct class of shares that carries no voting rights. This new stock class would be issued to existing shareholders as a stock dividend, allowing the company to raise capital for investments in AI, employee compensation, and potential acquisitions without diluting the voting control held by current shareholders.

The plan was first reported by Semafor on Wednesday, coinciding with Meta's earnings announcement. During the earnings call, Chief Financial Officer Susan Li elaborated on the proposal, stating the company intends to “create a new class of non-voting capital stock, which will be distributed to all existing shareholders through a stock dividend.” Li emphasized that the purpose is to create publicly traded, non-voting stock for general corporate purposes.

Li further explained that this structure would allow the company to preserve the “founder-led structure” and maintain the voting power of its current Class A and B shareholders. The new class of shares is intended to expand funding tools and provide flexibility to invest in the momentum across its business, driven by AI.

This financial maneuver comes as Meta reported strong earnings for the third quarter, surpassing Wall Street's expectations. Revenue reached $64 billion, a 26% increase from the previous year. However, costs and expenses also rose significantly, climbing 68% year-over-year. The company's Reality Labs division, which focuses on AR glasses, VR headsets, and related software, continues to operate at a loss, though the company projects that these losses will decrease from 2025 levels to between $18 billion and $19 billion.

Meta has been aggressively building out its AI capabilities over the past year, releasing several models such as Muse Spark and Muse Glimmer. Recent additions include Muse Wonder and an open-weight model called Muse Spark Open, along with a coding agent for developers named Muse Code. At its Meta Connect event, the company also announced a new line of avatars for its AI assistant, Meta Muse, to make the service more relatable.

The company reported strong adoption for its AI assistant, with CEO Mark Zuckerberg stating during the call that “more than 10 million people in the U.S. and Canada have set up Muse personal agents.” He added, “Growth continues to be strong, and we have been number one in the App Store almost every day.” Zuckerberg also noted that the company expects to grow the product’s appeal to eventually “serve billions of people.”

Despite these developments, the company acknowledged ongoing risks. Susan Li stated, “We continue to monitor active legal and regulatory matters that could significantly impact our business and financial results.” She pointed to scrutiny on youth-related issues in several markets and a number of youth-related trials scheduled for the coming months in the United States.

The creation of this new stock class would provide Meta with a way to fund its AI initiatives while keeping control firmly in the hands of its founders and current voting shareholders. The company has not yet disclosed further details on the timing or specifics of the stock dividend distribution.