Meta Plans 26% Revenue Jump and New Non-Voting Shares to Fund AI Surge

Meta faces a significant financial tightrope walk as it seeks to finance its aggressive expansion into artificial intelligence without sacrificing the control structure established by its founders. The company has confirmed plans to issue a new category of stock that lacks voting rights. This move aims to bridge the gap between its massive spending requirements and the desire to preserve the influence of existing Class A and Class B shareholders.

The strategy was revealed on Wednesday during the company's third-quarter earnings call. Susan Li, the chief financial officer, stated that Meta intends to create a new class of non-voting capital stock. She explained that this new equity will be distributed to current shareholders as a stock dividend. Li emphasized that the primary goal is to establish a publicly traded instrument that can be used for capital raising, employee compensation, and acquisitions. This approach allows the company to expand its funding tools while keeping the voting power firmly in the hands of the current leadership.

Li noted that this structural change supports the company's founder-led structure. It provides the flexibility needed to invest in what she described as the unprecedented momentum driven by AI across the business. By creating this separate class of shares, Meta can raise the necessary capital for its technological ambitions without altering the governance dynamics that have defined its corporate identity.

The financial results for the past quarter were robust, exceeding Wall Street expectations. Meta reported total revenue of $64 billion, representing a 26% increase from the same period a year ago. However, the company's costs and expenses also saw a significant climb, rising by 68% year-over-year. This surge in spending aligns with the company's broader strategy to invest heavily in new technologies and infrastructure.

While the core business is generating strong revenue, the Reality Labs division continues to operate at a loss. This unit, which handles augmented reality glasses, virtual reality headsets, and related software, is expected to narrow its deficit. The company projects that losses for Reality Labs will shrink from 2025 levels to a range between $18 billion and $19 billion. This reduction indicates that while the division is still in the red, it is becoming more efficient.

Meta has accelerated its AI initiatives over the past year, releasing several new models. These include Muse Spark and Muse Glimmer, which launched earlier this year. More recently, the company introduced Muse Wonder and Muse Spark Open. The latter is an open-weight model, meaning its underlying parameters are publicly available for external developers to use and build upon. Meta also launched Muse Code, a specialized agent designed to assist software developers with coding tasks.

At its Meta Connect event earlier this year, the company unveiled a line of friendly avatars for its AI assistant, Meta Muse. This move was intended to make the technology feel more relatable and accessible. CEO Mark Zuckerberg highlighted the rapid adoption of these tools during the earnings call. He stated that more than 10 million people in the United States and Canada have set up Muse personal agents in just a month and a half.

Zuckerberg claimed that growth remains strong, with the product ranking number one in the App Store nearly every day. He described the company as entering a new operational phase focused on scaling the product. The long-term vision is to serve billions of people, signaling a shift from early experimentation to mass-market deployment.

Despite the strong performance, Li acknowledged that regulatory and legal challenges remain on the horizon. The company is monitoring active matters that could impact its financial results. Specific scrutiny is focused on youth-related issues in several markets. Li noted that several youth-related trials are scheduled in the United States in the coming months, posing potential risks to the business.