Meta is creating a non-voting stock to pay for its AI spending

The skim

• Meta is creating a new, publicly traded Class C stock with no voting rights, effective January 19, 2027, so it can raise money, pay employees and buy companies without diluting Mark Zuckerberg's control.
• Every existing share will get one Class C share as a one-time dividend, which Meta says should work like a two-for-one stock split.
• The move came with strong third-quarter results: revenue rose 26% to $64.6 billion, but heavy data center spending pushed free cash flow to negative $2.1 billion.

What Meta announced

Meta's board approved "a new class of publicly listed, non-voting Class C common stock," the company said in its third-quarter earnings release on October 21. The reason was spelled out plainly: "The scale of investment required to compete, sustain growth, expand infrastructure, and pursue new strategic initiatives amidst the AI transformation taking place in the industry is significant."

Here's how it works. Meta will amend its Delaware charter with an effective date of January 19, 2027, then issue one Class C share for every Class A and Class B share outstanding. Meta expects Class A shares to trade as if the stock had split two-for-one. Nobody's voting power changes. A special committee of independent directors recommended the plan, and Meta says the new class is for capital raising, employee compensation, potential acquisitions and other corporate purposes. It also says the structure keeps the "founder-led model" in place. Google did something similar in 2014, when it created non-voting Class C shares to protect its founders' control.

CFO Susan Li said on the earnings call that the shares will "expand our funding tools and give us flexibility to invest behind the unprecedented momentum we're seeing across every part of our business driven by AI," The Verge reports.

The quarter behind it

Revenue was $64.60 billion, up 26% from a year earlier, as ad impressions rose 10% and the average price per ad climbed 14%. Net income was $9.86 billion, or $3.83 a share, after a $9.89 billion charge for Meta's August settlement with 52 attorneys general over teen mental health. Without that charge, earnings would have been $7.40 a share. Meta forecast fourth-quarter revenue of $73 billion to $76 billion.

The spending is what made the new stock necessary. Capital expenditures hit $34.91 billion in the quarter, and free cash flow was negative $2.12 billion. A year earlier it was positive $10.63 billion, according to Reuters. Meta now expects 2026 capex of $135 billion to $145 billion, raising the low end of its earlier $130 billion to $145 billion range. Headcount fell 15% from a year ago, to 66,775.

The company is pitching investors on Muse, its personal AI agent, which launched in September. Zuckerberg said more than 10 million people in the US and Canada have set up Muse in a month and a half, and that Meta will start making money from it "somewhat sooner on this than our normal playbook," Reuters reports. Li said AI businesses should start adding revenue in 2027. Investors bought the story, and the shares rose more than 4% after hours.

Why it matters

Meta is one of the most profitable companies in the world, and its AI building spree now costs more than the cash its business generates. A non-voting share class lets it pay for that with stock (for deals, talent or fresh capital) without loosening Zuckerberg's grip on the company. For ordinary shareholders, that cuts two ways. They get a currency that can help Meta keep up with OpenAI and Anthropic, but they give up any future say over how it's spent. The next things to watch are the record and payment dates for the dividend, which the board hasn't set yet, and how quickly Meta starts selling Class C shares once they trade.

Sources: Meta Q3 2026 results, Reuters, The Verge, CNBC on Muse sign-ups.