Meta introduces non-voting shares to fund massive AI expansion

Meta Platforms is restructuring its capital base to finance an aggressive expansion into artificial intelligence, introducing a new instrument that separates ownership from voting rights. The company confirmed on Wednesday, during its third-quarter earnings release, that it will create a distinct class of non-voting capital stock. This move is designed to provide the tech giant with additional financial tools to fund its heavy AI investments while protecting the governance structure established by its founders.

Susan Li, Meta’s chief financial officer, detailed the mechanism during the earnings call. She stated that the company intends to distribute this new class of shares to all existing shareholders via a stock dividend. Li explained that the primary objective is to create a publicly traded non-voting instrument that can be utilized for capital raising, employee compensation, and acquisitions. By doing so, Meta aims to preserve the voting power currently held by Class A and B shareholders.

This strategic shift allows Meta to maintain its founder-led structure while expanding its funding capabilities. Li noted that the new shares provide the flexibility needed to invest in the "unprecedented momentum" the company sees across its business, which is largely driven by AI. For a company of Meta’s scale, the ability to raise capital without altering the balance of voting power is a significant financial maneuver.

The announcement came alongside a strong set of financial results for the quarter. Meta reported revenue of $64 billion, marking a 26% increase from the same period a year ago. This performance exceeded expectations set by Wall Street analysts. However, the company’s cost structure also saw a substantial increase, with expenses rising by 68% year-over-year, reflecting the heavy spending associated with its AI and hardware initiatives.

Despite the overall revenue growth, Meta’s Reality Labs division continues to operate at a loss. This unit, which oversees augmented reality glasses, virtual reality headsets, and related software, remains a financial drag on the company. However, the bleeding is slowing down. Meta indicated in its report that it expects the division’s losses to narrow significantly, projecting a loss range of $18 billion to $19 billion, down from its 2025 levels.

The company has been deeply engaged in AI development over the past year, releasing several major models including Muse Spark and Muse Glimmer earlier this year. In recent weeks, Meta expanded this portfolio with Muse Wonder and Muse Spark Open, the latter being an open-weight model with publicly available parameters. The company also launched Muse Code, a coding agent for software developers, and announced a new line of avatars for its AI assistant, Meta Muse, during its Connect event to make the technology more relatable.

Early indicators suggest these AI products are gaining traction. CEO Mark Zuckerberg reported that more than 10 million people in the U.S. and Canada have set up Muse personal agents in just one and a half months. He noted that the product has maintained the number one position in the App Store almost every day. Zuckerberg characterized this period as a shift toward a more operational phase, focused on scaling the service to eventually serve billions of users.

While the AI strategy appears to be gaining momentum, Meta is not without challenges. The company acknowledged that regulatory and legal issues remain on the horizon. Li stated that the company continues to monitor active matters that could impact its financial results. Specifically, she pointed to ongoing scrutiny regarding youth-related issues in several markets, with several trials scheduled in the United States in the coming months.