Meta's AI spending spree triggers creation of new share type

The financial details of Meta's aggressive push into artificial intelligence are becoming clear, and the company plans to create a new class of stock to help finance the effort. The move, announced alongside third-quarter financial results, would allow Meta to raise capital without diluting the voting power of its current shareholders.

Chief Financial Officer Susan Li outlined the plan, stating the company intends to 'create a new class of non-voting capital stock, which will be distributed to all existing shareholders through a stock dividend.' Li explained that these new shares are intended to be 'usable for capital raising, employee compensation, acquisitions, and other general corporate purposes while preserving the voting power of existing Class A and B shareholders.'

This structure will allow Meta to maintain its 'founder-led structure' while expanding its 'funding tools and give us flexibility to invest behind the unprecedented momentum we're seeing across every part of our business, driven by AI,' Li added. The proposal to create these non-voting shares was first reported by Semafor on Wednesday, and the company later confirmed the report during its earnings call.

The company's financial performance supports this expansion. Meta reported revenue of $64 billion for the quarter, a 26% increase from the same period last year, surpassing Wall Street expectations. However, the company's costs and expenses also saw a significant rise, increasing by 68% year-over-year. The Reality Labs division, which focuses on augmented and virtual reality technology, continues to operate at a loss, with projected losses for the current year expected to be between $18 billion and $19 billion.

Meta has released several new AI products in recent months, including the models Muse Spark and Muse Glimmer earlier this year. More recently, it launched Muse Wonder, Muse Spark Open, and a coding tool for developers called Muse Code. The company is also pushing to make its AI assistant, Meta Muse, more engaging by introducing a new line of cute avatars for it.

Adoption of these tools appears strong, according to the company. CEO Mark Zuckerberg reported that 'more than 10 million people in the U.S. and Canada have set up Muse personal agents' in just a month and a half. He stated that growth for the product remains strong and that it has been number one in the App Store almost every day.

Looking ahead, the company is moving into a new phase of development for its AI assistant. 'Now that Muse has clear product-market fit, we are entering a new phase and a more operational phase that is focused on scaling it,' Zuckerberg said, adding that the company expects to eventually 'serve billions of people.'

The company continues to monitor active legal and regulatory matters that could significantly impact its business, Li noted. 'For example, we continue to see scrutiny on youth-related issues in several markets, and have a number of youth-related trials scheduled in the coming months in the United States,' she said.