Financeupdated 1h ago3 min read
Meta Creates Non-Voting Class C Stock, Funds AI Spending Without Diluting Voting Power
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Meta plans to issue publicly listed non-voting Class C stock effective January 19, 2027. The Class C stock funds AI buildout, acquisitions, and talent while preserving Zuckerberg's voting power.
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“which suggests it’s likely to lean heavily on new share sales to fund its AI buildout.”
“create a new class of non-voting capital stock, which will be distributed to all existing shareholders through a stock dividend.”
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Class C for AI Funding
Meta Platforms said its board declared a dividend of one share of Class C common stock for each outstanding share of Class A and Class B common stock as part of a recapitalization that takes effect Jan. 19, 2027.
Meta said the Class C shares carry no voting rights, and the company said shareholders won’t vote on the change because entities tied to Mark Zuckerberg and his wife, Priscilla Chan, that hold 56.1% of Meta’s voting power approved it on Tuesday.
Meta said the shares let it raise capital, pay employees and fund acquisitions without diluting voting power, and Meta said it expects to sell Class C stock from time to time.
Meta also said it expects to sell Class C stock from time to time, while Benzinga reported that Meta’s third-quarter revenue was $64.6 billion, beating analyst estimates of $63.37 billion, and that adjusted earnings were $7.40 per share.
Meta’s plan arrived alongside a capital-spend outlook that Nicholas Mugalli, CEO and principal of World Trade Securities, described as a sign of “more capex coming,” with 2026 capex already guided at $135 billion to $145 billion.
Legal Charge and Profit
Meta reported net income of $9.860 billion, or $3.83 a diluted share, for the quarter ended Sept. 30, compared with $2.709 billion, or $1.05 a share, a year earlier.
Meta said its reported profit was heavily affected by a $9.89 billion legal-proceedings charge tied to its August agreement with 52 U.S. attorneys general over litigation concerning teen mental health and social media.
Meta said the agreement provided for payments of up to about $18.59 billion, while the charge recognized in the third quarter was the lower $9.89 billion amount.
Meta said operating income was $12.988 billion, down 37% from the prior-year quarter, as costs and expenses rose 68% to $51.613 billion, and it said excluding the charge operating income would have been $22.88 billion and diluted earnings per share would have been $7.40.
Meta also said it expects fourth-quarter revenue of $73 billion to $76 billion versus estimates of $73.74 billion, and it said it narrowed its 2026 capital-expenditure outlook to $135 billion to $145 billion.
Capital Spending Pressure
Meta said capital expenditures, including principal payments on finance leases, totaled $34.91 billion in the third quarter, and FindArticles said the company’s midpoint of its new full-year capital-expenditure range is $140 billion. Meta’s spending plans also reached beyond its own balance sheet, and Startup Fortune said Meta tried this exact move once before in 2016, proposing a Class C stock so Zuckerberg could keep control while giving away shares through the Chan Zuckerberg Initiative. Startup Fortune said shareholders sued, and Meta abandoned that plan in 2017, while it said a decade later Meta paired the new structure with a Founder Alignment Agreement signed October 20 that restricts Zuckerberg from selling Class C shares without a matching cut to his own voting power.
Meta said it expects its Class A share price to reflect the effect of a two-for-one stock split after the payment, while BigGo Finance said free cash flow turned negative at $2.12 billion, compared with positive $10.63 billion a year earlier. Meta’s board said the Class C shares would be usable for capital raising, employee compensation, acquisitions and other general corporate purposes, and TechCrunch said Meta’s chief financial officer, Susan Li, said the company plans to “create a new class of non-voting capital stock, which will be distributed to all existing shareholders through a stock dividend.”