Meta Platforms (NASDAQ: META) reported record third-quarter revenue of $64.6 billion and announced plans to issue a new class of nonvoting shares as it expands its artificial intelligence investments. The move is designed to give the company another way to raise capital without weakening CEO Mark Zuckerberg’s voting control, while a one-time share dividend is expected to produce the economic effect of a 2-for-1 stock split in January 2027.
Meta disclosed the changes alongside its third-quarter earnings results on October 21. Revenue rose 26% from a year earlier, beating Wall Street expectations of about $63.3 billion. Shares gained about 2.9% in after-hours trading following the report, The Wall Street Journal reported.
The new Class C shares will have no voting rights and are intended for purposes including capital raising, employee compensation and potential acquisitions. Meta plans to distribute one Class C share for each existing Class A and Class B share, subject to the effectiveness of a revised certificate of incorporation. The effective date is January 19, 2027, although the board has yet to set the record and payment dates.
The structure would let Meta issue or sell additional shares to help finance its expansion while preserving the existing balance of shareholder voting power. Zuckerberg’s control is largely maintained through Class B shares, which carry more votes per share than publicly traded Class A stock.
The distinction is important for investors: the stock dividend itself does not generate cash for Meta or automatically create additional value for shareholders. The potential funding benefit comes from the company’s ability to use the new class for future financing and other corporate purposes.
What Meta’s New Class C Shares and Stock Split Mean
Meta’s planned distribution is similar economically to a 2-for-1 stock split. Holders of existing Class A and Class B shares are expected to receive one additional nonvoting Class C share for each share they own. After the distribution, Meta expects the market price of its Class A stock to reflect the effect of a two-for-one split.
That does not mean shareholders receive a free profit. In a conventional stock split, the share count increases while the price per share adjusts to reflect the same underlying ownership value. Meta’s arrangement is different in that the additional shares will belong to a separate nonvoting class, but the company says the distribution will not change shareholders’ voting power.
The board approved the proposal after a special committee of independent directors reviewed the capital structure. Meta also entered into a Founder Alignment Agreement with Zuckerberg covering matters related to his Class C shares and future stock dividends. Further details are expected in company filings with the Securities and Exchange Commission.
The financing flexibility comes as Meta’s AI spending moves to a new scale. The company has been expanding computing infrastructure for model training and AI products while applying AI to content recommendations and advertising. That investment is already influencing its financial outlook, as investors have been weighing the returns from Meta’s AI spending against the cost of its data centers and computing capacity.
The potential use of Class C shares also gives Meta more flexibility to compensate employees and pursue acquisitions without relying solely on cash or additional voting shares. Still, the new class does not guarantee that Meta will issue or sell shares immediately, nor does it specify how much capital the company expects to raise. Those decisions will depend on future financing needs and market conditions.
Record Revenue Faces Higher Costs and a Large Legal Charge
Meta’s third-quarter revenue reached $64.60 billion, compared with $51.24 billion a year earlier. Advertising remained the main growth engine: advertising revenue rose to $63.06 billion, while the number of ad impressions increased 10% and the average price per ad rose 14%. The company’s family of apps averaged 3.64 billion daily active people in September, up 3% year over year.
Net income was $9.86 billion, or $3.83 per diluted share, compared with $2.71 billion and $1.05 per share in the prior-year quarter. However, those headline figures reflect unusual items in both periods. The latest quarter included a $9.89 billion charge related to an agreement with US state attorneys general over litigation concerning teen mental health and social media. Excluding that charge, Meta said diluted earnings per share would have been $7.40.
The year-earlier quarter also included an unusually large tax expense. That makes the increase in reported net income less representative of underlying operating progress than the headline percentage suggests. Meta’s reported operating income fell 37% to $12.99 billion, and its operating margin declined to 20% from 40%, partly because total costs and expenses jumped 68% to $51.61 billion.
The company is also spending more to develop its AI products. Capital expenditure, including principal payments on finance leases, reached $34.91 billion in the quarter. Meta narrowed its full-year 2026 capital expenditure outlook to $135 billion–$145 billion from a previous range of $130 billion–$145 billion. Operating cash flow was $32.79 billion, leaving free cash flow negative at $2.12 billion for the quarter.
Those figures explain why Meta is seeking more flexibility in its capital structure. Its core advertising business is generating strong sales, but the pace of spending means cash available after investment can fluctuate sharply. The wider market is also scrutinizing whether AI companies can turn growing demand into sustainable returns, a question raised by the earnings test facing AI-related stocks.
Meta’s Muse AI assistant is another part of the investment strategy. Mark Zuckerberg said more than 10 million people in the US and Canada had opened Muse accounts, with about one-quarter of account holders using it on a given day. He said the company expects to improve its computing efficiency by more than tenfold over the next year and sees a path to profitability once its revenue streams reach scale. The company has also been expanding Muse into business use through integrations intended to help small businesses manage work across their software tools.
For the fourth quarter, Meta forecast revenue of $73 billion to $76 billion, putting the midpoint above the analyst estimate of roughly $73.65 billion. The company also expects losses in its Reality Labs division to total $18 billion–$19 billion in 2026, then narrow to around $15 billion in 2027 as investment shifts toward AI.
The results show why investors are balancing Meta’s sales momentum against its growing capital needs. Earlier enthusiasm over Muse’s initial adoption has supported the company’s AI narrative, but sustained confidence will depend on whether new products can generate revenue while advertising continues to fund the business.
Meta’s planned Class C stock does not eliminate the financial risks of its AI buildout. It does give the company another option for financing growth while preserving Zuckerberg’s control. The central question for shareholders is whether the returns from AI can keep pace with the costs of building and operating the infrastructure required to support it.