Meta Approves One Non-Voting Share for Each Existing Share and Raises Capital Spending to $145 Billion
Key Facts
Meta approved the creation of new Class C common shares with no voting rights and a distribution of one share for every existing Class A and Class B share, giving it a way to finance its expansion without changing current shareholders’ voting power. The board approved an amendment to the charter on October 19, 2026, and shareholders holding a majority of the voting power approved it in writing on October 20, according to the company’s filing with the U.S. Securities and Exchange Commission. The amendment is scheduled to take effect on January 19, 2027. The board will set the record and payment dates later, with the distribution to be made no later than the fifth business day after it takes effect. The company expects the Class A share price after the distribution to reflect the effect of a two-for-one stock split.
Meta says the new class will allow it to raise capital, fund employee compensation and finance potential acquisitions, among other corporate purposes. In its information statement, it said issuing Class C shares would not dilute the voting power of Class A and Class B holders. The company expects to make Class C share offerings from time to time in the future, making the class a financing tool among its options as it continues to invest in its businesses. Chief Financial Officer Susan Li said the new shares “will expand our financing tools and give us the flexibility to invest behind the unprecedented momentum we are seeing across different parts of our business, driven by AI.” Chief Executive Mark Zuckerberg added that “our investments are paying off, the core business is strong, and we are seeing momentum across the board.”
The distribution mechanism includes special restrictions on shares that will go to Mark Zuckerberg and his group. Twenty percent of the Class C shares distributed to them will be freely saleable, while the remaining 80% will be subject to restrictions on sale and transfer, according to the founder’s agreement filed with the SEC. When restricted shares are sold, the agreement requires one Class A or Class B share to be sold for each Class C share, or the use of the credit mechanism set out in the agreement. These restrictions separate voting rights from economic ownership: Class C shares carry no vote but remain tradable under the prescribed terms. The distribution is scheduled to begin after the amended charter takes effect in January 2027, with the board to set the record and payment details later.
The announcement came alongside quarterly results showing revenue growth above analysts’ expectations, as the company increased infrastructure spending. Third-quarter revenue was $64.60 billion, up 26% from $51.24 billion in the same period a year earlier and above the average forecast of $63.34 billion, according to The Associated Press. The average number of daily active people across Meta’s apps was 3.64 billion in September 2026, an annual increase of 3%. Ad impressions also rose 10% year over year in the third quarter. The company is drawing on this activity and ad growth as it expands investment in AI and its core businesses.
Meta raised the low end of its 2026 capital spending forecast to $135 billion, from a previous low of $130 billion, and kept the high end at $145 billion. The company said the spending supports its AI efforts and core businesses, as the cost of building the infrastructure needed for expansion rises. On cash flow, Meta posted negative free cash flow of $2.12 billion in the third quarter, compared with positive cash flow of $10.63 billion a year earlier, according to Reuters. The company forecast fourth-quarter revenue of between $73 billion and $76 billion, while analysts’ forecast was $73.65 billion. It also said losses at its Reality Labs unit are expected to narrow to about $15 billion in 2027 as it redirects investment to other areas, led by AI, without providing full revenue guidance for that year.
Rising concerns about the cost of expansion were reflected in trading after the results announcement. Meta shares rose more than 4% in extended trading after the announcement, according to Reuters, before falling 7% on October 22, their biggest drop since July, amid investor concerns about the scale of AI spending and how it will be financed. Available closing data show the stock at $709.33 on October 16, then $705.44 on October 19 and $694.25 on October 20. It closed at $697.52 on October 21 before ending the October 22 session at $648.85. Markets are watching for the share distribution in January, as well as the impact of elevated capital spending and the fourth-quarter revenue outlook.