Meta Launches Non-Voting Share Class to Increase Capital

Meta Platforms will issue a new class of non-voting Class C shares, providing one such share for each existing one. This will allow the company to raise funds without diluting shareholders' voting rights. The proposal was announced in the third-quarter report, where free cash flow was −$2.12 billion. Capital expenditures reached $34.91 billion, exceeding cash from operations. A special committee of independent directors recommended the new class of shares, highlighting three key reasons: funding for capital needs, employee compensation, potential acquisitions, and other corporate purposes; the long-term value of Meta shares, which have grown more than 1,700% since the IPO; the desire to maintain the leadership model under CEO Mark Zuckerberg's management.

Meta's revenue for the third quarter was $64.6 billion, up 26% compared to the same period last year. However, operating cash flow of $32.79 billion fell short of capital expenditures. A year earlier, free cash flow was $10.63 billion. Over three quarters, Meta did not conduct any buybacks of Class A shares, whereas in the same period in 2025, it spent $26.25 billion on this. As of September 30, Meta held $82.45 billion in cash and marketable securities. The report does not specify a plan or schedule for selling Class C shares. Meta claims that the stock dividend will not alter shareholders' voting rights, but there is a separate agreement limiting the number of new shares Zuckerberg can sell without reducing his voting rights. Zuckerberg signed a leadership retention agreement on October 20: only 20% of the Class C shares due to him and certain permitted recipients can be sold freely; for the remaining 80%, each sale generally requires a concurrent sale or conversion of his voting shares.

The new class of shares will take effect on January 19, 2027. The record and payment dates have not yet been determined, but the payment must be made within five business days. A similar step was taken by Google in 2014 when it issued non-voting Class C shares. In after-hours trading on October 21, Meta shares rose 2.17% to $712.65 relative to the close on October 21. The company also forecasts fourth-quarter revenue of between $73 billion and $76 billion.