Meta Raises Common Stock Offering to $25 Billion to Fund Expansion
Key Facts
On October 27, Meta raised the value of its planned common stock offering to $25 billion, priced at $625 per share, compared with $22.5 billion in the previous day's announcement, according to Reuters. The offering is part of financing moves linked to the company's expansion in artificial intelligence, while Meta said the net proceeds from the forward sale agreements would be used for general corporate purposes. The timing differs from Alphabet's capital raise announced in June 2026; Alphabet's move was not a new offering announced in October. The two moves, at different times, reflect two large technology companies turning to equity markets as capital spending on infrastructure expands. Meta's case stands out in particular after it recorded negative free cash flow in the third quarter.
Meta's parallel offering included 250 million convertible preferred depositary shares, priced at $50 per share and worth a total of $12.5 billion, according to Reuters. The company is thus combining an issuance of common shares and forward sale agreements with convertible preferred shares. Meta's filing with the Securities and Exchange Commission said it does not expect to receive initial proceeds from the sale of Class A shares through the forward sale agreements. The company plans to use the net proceeds for general purposes when those agreements are settled. The filing set a settlement date to be chosen by Meta on one or more dates, no later than November 19, 2027.
The fundraising comes as Meta faces mounting pressure on the liquidity generated by its business. The company recorded a cash burn of $2.12 billion in the third quarter of 2026, its first negative free cash flow in more than a decade, according to Reuters. Free cash flow was positive at $10.63 billion in the same period a year earlier. Meta also narrowed its 2026 capital spending forecast to between $135 billion and $145 billion, from a previous range of $130 billion to $145 billion, according to the Associated Press. The revision leaves the forecast ceiling at its previous level but raises the lower end of expected spending.
Cash pressures do not mean Meta entered the fundraising process without substantial liquid assets. Company data showed that as of September 30, 2026, it had $82.45 billion in cash, cash equivalents and marketable securities. Long-term debt stood at $80.92 billion on the same date. Meanwhile, the London Stock Exchange Group forecast that capital spending growth would exceed operating cash flow growth at four of five cloud giants. It estimated that Meta's free cash flow would fall 61.1% over the following twelve months, while it forecast a 70.8% decline at Oracle, the larger of the two companies, according to its estimates.
The company is expanding its computing capacity alongside this spending. Meta said in its filing that it owns data centers in 23 U.S. states and is building four supercomputing clusters, each with capacity exceeding one gigawatt. The company also raised its 2026 capital spending forecast, and expects revenue to exceed annual growth of 20% for the sixth consecutive quarter through the third quarter of the year. Meta attributed part of this growth to AI improvements in recommendation, engagement and advertising systems. It also said that more than 10 million users in the United States and Canada had used Muse during the first weeks after its launch, and that shopping was the leading use case for more than a quarter of its weekly active users.
Meta's plan includes potentially additional financing after the launch of non-voting Class C shares, with the at-the-market stock sale program potentially reaching $60 billion and set to begin after trading in those shares starts, which is expected in the first quarter of 2027, according to Reuters. Nvidia, AMD and Broadcom also expressed interest in buying up to a combined $5 billion in common shares from the offering, and Nvidia announced a $3 billion investment in it. The chip companies' participation shows the overlap between financing Meta's expansion and the suppliers of the technology infrastructure on which it relies. William Blair analysts said investors would continue to ask questions about financing and the possibility of raising additional capital, adding that the deal reflects Meta's confidence in the returns on AI investment and its capital-intensive nature. In trading, Meta shares closed down about 2% at $630.56 on October 26, then fell about 1% on October 27; Alphabet shares closed at $320.58 on October 27, according to EL7 data.