Meta sells $35 billion of stock to fund AI, and the next $60 billion has no vote

Meta Platforms, the owner of Facebook, Instagram and WhatsApp, has launched tens of billions of dollars of share offerings to pay for its artificial intelligence build-out, and says an even larger sale could follow through a new class of stock that carries no vote. A company that spent years handing cash back to shareholders by buying its own stock is now asking them for money to keep building.

That reaches well beyond Nasdaq. Anyone whose pension or index fund holds Meta is about to own a slightly smaller slice of it, and the buyers of the next wave of shares will have no say over how the money is spent.

Why a cash machine needs cash

The arithmetic sits in Meta’s own quarterly results. Its apps reach 3.64 billion people a day, and revenue rose 26% in the third quarter to $64.6 billion, the sixth straight quarter of growth above 20%. Yet capital spending of $34.9 billion in the quarter, about 80% more than a year earlier, outran the cash the business produced, leaving free cash flow at minus $2.12 billion. Meta expects capital spending of $135 billion to $145 billion this year.

The balance sheet tells the same story. Meta held $82.45 billion in cash and marketable securities at the end of September, barely more than its $80.92 billion of long-term debt, and Reuters reported that the company has committed to roughly $825 billion of future spending, mostly on data centers and computing capacity. Meta calls the new equity “a complementary source of capital” next to cash flow and debt.

The offerings, worth about $35 billion and run by Morgan Stanley and Goldman Sachs, come in two pieces. About $22.5 billion is ordinary Class A stock sold through forward agreements, so Meta receives no cash at first and collects it later. Roughly $12.5 billion is mandatory convertible preferred stock that pays a dividend and turns into common shares. Nvidia, AMD and Broadcom, three of Meta’s main chip suppliers, have together indicated interest in buying up to $5 billion of the common stock, the company said, though that interest is not binding.

The vote stays with Zuckerberg

The bigger plan rests on the Class C shares that Meta’s board approved alongside its quarterly results. They will be listed but carry no voting rights, and every Class A and Class B shareholder will receive one for each share they hold. A special committee of independent directors backed the structure partly because it keeps Mark Zuckerberg, Meta’s founder and chief executive, in charge. A planned programme of about $60 billion, not yet signed, would sell those shares on the open market, so fresh money can arrive without diluting the control he holds through his super-voting Class B stock.

Who carries the bill

The offering does not answer the question investors have pressed all year, which is when the spending pays off. Meta says AI already lifts ad performance, and part of that shows, with ad impressions up 10% and the average price per ad up 14%. That second figure lands on advertisers, including the small businesses Meta estimates at more than 500 million users of its apps. The newer bets are slower. Meta conceded that its superintelligence lab spending “will take longer to generate returns” than the core business, and its Muse assistant is available only in the United States and Canada. Staff feel the squeeze too: headcount was 66,775 at the end of September, down 15% in a year. And if the chipmakers do buy, some of the money Meta raises will come from the companies it pays for chips.

Meta’s shares fell as much as 4% on Monday before recovering to trade about 1% higher, The Next Web reported. The sale is registered in the United States, so investors in Europe, Asia and Latin America feel it mainly through funds that already hold the stock.

The preferred stock’s dividend rate and conversion terms will be set at pricing, and Meta plans to list it on Nasdaq under the ticker METAM. The forward sales must settle by November 19, 2027, the preferred shares convert around August 15, 2029, and the Class C stock is due to take effect on January 19, 2027, with the open-market sales expected to begin in the first quarter of that year.

For years, shareholder proposals to end Meta’s dual-class structure came back to the annual meeting and lost. The buyers of the next $60 billion of stock will not even get a ballot.

Tags: meta, AI infrastructure, Mark Zuckerberg, Nasdaq, Class C stock, share offering