Meta Creates New Stock Class to Fund Artificial Intelligence Push

Meta announced plans to issue a new category of nonvoting shares on Wednesday to finance massive investments in artificial intelligence and cover corporate costs.

The social media giant revealed the strategy alongside third quarter financial results showing revenue rose 26 percent to $64.6 billion while capital expenditures reached $34.9 billion.

The corporate restructuring comes as technology companies grapple with massive infrastructure expenses required to build advanced data centers and train large language models.

Chief Executive Mark Zuckerberg weighed leaving California earlier this year after officials proposed a ballot measure known as Proposition 40 that would impose a 5 percent tax on billionaire assets.

A special board committee negotiated a founder agreement requiring Zuckerberg to maintain his primary residence in the state in exchange for liquidity options that preserve his voting majority.

"The goal is to keep Zuckerberg continuing to lead the company from California and in close proximity to Meta Superintelligence Labs," according to a regulatory filing.

The agreement allows Zuckerberg to sell a portion of the new shares immediately to handle potential tax obligations if voters approve the ballot measure next month.

Susan Li, the chief financial officer of Meta, spoke about the corporate changes during a conference call with investors on Wednesday.

"The scale of investment required to compete, sustain growth, expand infrastructure, and pursue new strategic initiatives amidst the AI transformation taking place in the industry is significant," said Meta.

Li added that the strategy will expand funding tools and give the company flexibility to pursue new initiatives driven by artificial intelligence.

"In just a month and a half, more than 10 million people in the U.S. and Canada have set up Muse personal agents," said Mark Zuckerberg, the chief executive officer, during the earnings call.

Other prominent technology executives have also altered their residency status or corporate registrations to avoid the proposed tax legislation in California.

Voters will decide the fate of Proposition 40 in November as campaigns continue spending millions of dollars on opposing advertisements.