Meta creates a new type of share to fund its massive AI expansion

Major technology companies often face a difficult choice when they want to spend billions on new projects. They must decide how to pay for the work without diluting the power of their existing investors. Meta has chosen a specific path to solve this problem as it pushes deeper into the world of artificial intelligence.

The company announced on Wednesday that it intends to issue a new category of stock. This new class of shares will not carry voting rights. This means that people who buy these shares will own a piece of the company, but they will not get a say in how the company is run. The move was reported by Semafor just as Meta released its financial results for the third quarter.

During the earnings call, the company confirmed the plan directly to investors. Susan Li, the chief financial officer, explained that the new non-voting capital stock will be given to all current shareholders as a stock dividend. This ensures that existing owners receive their share of the new instrument without having to buy it separately.

Li provided more detail on why the company is taking this step. She stated that the goal is to create a publicly traded non-voting stock. This tool will be used for raising capital, paying employees, making acquisitions, and other general business needs. The primary benefit is that it allows Meta to raise money without changing the voting power held by the current Class A and Class B shareholders.

This structure is designed to preserve what the company calls its founder-led structure. By keeping voting rights separate from the new shares, Meta can maintain control while still having more financial tools. Li noted that this gives the company the flexibility to invest in the strong momentum it is seeing across its business, which is largely driven by AI developments.

The financial results for the quarter were strong, with the company beating expectations set by Wall Street. Meta reported total revenue of $64 billion. This represents a 26% increase compared to the same period a year ago. However, the costs and expenses associated with these operations also rose significantly, climbing 68% year-over-year.

One area that continues to struggle is Reality Labs. This division handles the company's augmented reality glasses, virtual reality headsets, and related software. It is still losing money, although the losses are smaller than in previous years. The company expects these losses to shrink further, projecting that they will fall to between $18 billion and $19 billion, down from 2025 levels.

Over the past year, Meta has released several new AI models. These include Muse Spark and Muse Glimmer, which launched earlier this year. More recently, the company added Muse Wonder and Muse Spark Open. The latter is an open-weight model, meaning its underlying parameters are available for outsiders to use and build upon. Meta also launched Muse Code, an agent designed to help software developers write code.

At its Meta Connect event this year, the company introduced a new line of avatars for its AI assistant, Meta Muse. These characters are described as cute and cuddly, aiming to make the technology feel more relatable and shareable. The company believes these products are gaining traction quickly.

CEO Mark Zuckerberg highlighted the rapid adoption of the new tools. He 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 phase focused on scaling the product to serve billions of people. He also mentioned that the company is monitoring legal and regulatory matters, including trials related to youth issues scheduled in the coming months.