Meta bets on new non-voting shares to fund AI boom

Meta is facing a significant financial decision as it races to expand its artificial intelligence capabilities. To cover the substantial costs of this technological push, the company is preparing to issue a new type of equity that separates ownership from governance rights.

During its third-quarter earnings announcement on Wednesday, Meta confirmed reports that it plans to create a distinct class of non-voting capital stock. Susan Li, the company’s chief financial officer, explained that these shares will be distributed to current shareholders via a stock dividend. This new instrument is designed to serve as a versatile tool for raising capital, compensating employees, and facilitating acquisitions, all while preserving the existing voting power held by Class A and Class B shareholders.

Li stated that this move allows the company to maintain its founder-led structure. She added that the new shares expand Meta’s funding options, providing the flexibility needed to invest in the rapid momentum generated by AI across the business.

The financial backdrop for this strategic shift is a mix of strong revenue and rising costs. Meta reported $64 billion in revenue for the quarter, representing a 26% increase over the same period last year. However, expenses surged by 68% year-over-year. Meanwhile, the Reality Labs division, which handles AR and VR hardware, continues to operate at a loss, though the company expects these deficits to narrow from 2025 levels to a range of $18 billion to $19 billion.

The AI division, which is driving much of the spending, has seen notable product releases. Earlier this year, the company introduced models such as Muse Spark and Muse Glimmer. Recently, it launched Muse Wonder and an open-weight version of Muse Spark, allowing external developers to access the underlying parameters. Additionally, Meta released Muse Code for software developers and announced new avatar options for its Meta Muse assistant at its Connect event.

Market response to these AI products appears positive. CEO Mark Zuckerberg noted that more than 10 million people in the U.S. and Canada set up Muse personal agents in just six weeks. He claimed the product holds a top position in the App Store daily and stated that the company is now entering a scaling phase, with long-term goals to serve billions of users.

Despite the growth, challenges remain. Li acknowledged that ongoing legal and regulatory matters could impact financial results. Specifically, she highlighted increased scrutiny regarding youth-related issues, noting that several related trials are scheduled in the United States in the coming months.