Meta Platforms is establishing a new class of non-voting capital stock to support its significant investments in artificial intelligence, potential acquisitions, and employee compensation. This announcement was made during the company's third-quarter earnings report on Wednesday.
The non-voting shares are intended to expand Meta's funding tools and provide flexibility for investing in the substantial momentum observed across its business, driven by AI, according to Meta's Chief Financial Officer, Susan Li, as reported by The Verge. TechCrunch also noted Li's statement that this move aims to preserve the voting power of existing Class A and B shareholders, maintaining the company's current founder-led structure.
Funding AI and Corporate Purposes
Meta plans to distribute this new class of non-voting stock to all existing shareholders through a stock dividend, according to TechCrunch. The Verge adds that trading for these shares is expected to begin in 2027. The company highlighted that the required scale of investment to compete, sustain growth, expand infrastructure, and pursue new strategic initiatives amidst the industry's AI transformation is significant.
Meta has been heavily investing in the AI sector, allocating billions of dollars to build extensive data centers and recruit talent. The Verge reports that the company projects capital expenditures between $135 billion and $145 billion for the current year, an increase from a previous estimate. This investment underpins the development of AI models designed to compete with those from other major technology companies.
Recent AI Product Launches and Performance
In recent months, Meta has launched several AI products. The Verge noted the September release of its AI agent, Muse, which can assist with tasks such as email management, restaurant bookings, and trip planning. The company also rolled out its Muse Wonder model recently. TechCrunch additionally mentioned earlier releases this year, including Muse Spark and Muse Glimmer, alongside Muse Spark Open, an open-weight model, and Muse Code, a coding agent for developers.
The reception for these new AI offerings has been strong. Mark Zuckerberg, Meta's CEO, stated during the earnings call that over 10 million people in the U.S. and Canada have set up Muse personal agents in just a month and a half, according to TechCrunch. He also noted that the Muse app has frequently been a top download in app stores. The Verge specified that the Muse app reached 10 million downloads in the U.S. within its launch period. Zuckerberg indicated that with Muse demonstrating clear product-market fit, the company is now entering an operational phase focused on scaling it to eventually serve billions.
However, the launch of Muse has faced some challenges. The Verge reported concerns regarding user privacy, including an instance where the agent allegedly provided a user's address to a stranger. Additionally, Meta had to temporarily pause Muse's conversation-sharing feature after researchers found chats publicly available online.
Financial Context and Future Outlook
Meta reported strong third-quarter earnings, exceeding Wall Street expectations. TechCrunch reported that the company achieved $64 billion in revenue, marking a 26% increase year-over-year. Concurrently, costs and expenses rose by 68% over the same period. The Reality Labs division, responsible for Meta's augmented reality glasses, virtual reality headsets, and software, continues to incur losses, though these losses are projected to shrink to between $18 billion and $19 billion from 2025 levels, according to the company's earnings report as detailed by TechCrunch.
Despite the positive financial results and AI momentum, Meta also monitors ongoing regulatory and legal issues. Susan Li mentioned scrutiny related to youth issues in several markets, with upcoming youth-related trials scheduled in the United States, as reported by TechCrunch. These matters could significantly impact the company's business and financial results.
