Meta to issue nonvoting Class C shares, lifts capex floor

Meta Platforms ↗ 0.47% said on Wednesday, October 21, that it will create a new class of publicly listed, nonvoting Class C shares. It also raised the low end of its 2026 capital spending forecast as it spends heavily on artificial intelligence. Third-quarter revenue rose 26% from a year earlier to $64.60 billion, above the LSEG consensus of $63.37 billion.investor.atmeta.com+1

The new shares could let Meta fund acquisitions and attract talent without diluting CEO Mark Zuckerberg's voting control. This comes as spending on chips and data centers erodes the company's free cash flow, which has historically been strong.marketscreener.com

A built-in stock split

The board approved the Class C stock after a special committee of independent directors unanimously recommended it. The committee said the class will help Meta "finance its growth" during the AI transformation and will keep the "founder-led model" in place. The change takes effect on January 19, 2027. Meta will then pay a one-time dividend of one Class C share for each Class A and Class B share, which the company expects to work like a two-for-one split for Class A stock. Voting power will not change. Meta also signed a Founder Alignment Agreement with Zuckerberg that covers his sales of the new shares and his service at the company. It plans to list the Class C stock on Nasdaq ↗ 1.39%.investor.atmeta.com

Spending and guidance

Meta now expects 2026 capital expenditures of $135 billion to $145 billion, up from its earlier range of $130 billion to $145 billion. It spent $34.91 billion in the third quarter, and free cash flow was negative $2.12 billion. The company forecast fourth-quarter revenue of $73 billion to $76 billion. The midpoint of that range is above analysts' estimate of $73.73 billion. Meta said it expects to "continue investing aggressively" in 2027.cnbc.com+1

Diluted earnings were $3.83 per share. That figure includes a $9.89 billion charge tied to Meta's August settlement with 52 attorneys general over teen mental health. Without the charge, earnings would have been $7.40 per share.investor.atmeta.com

AI momentum, legal pressure

Zuckerberg pointed to the launch of the Muse assistant and Muse Wonder, which he called "our first frontier model," as milestones toward "personal superintelligence for everyone". Bank of America analysts had cautioned that Muse "will consume capacity w/o near-term revs".cnbc.com+1

Legal costs are also rising. Earlier on Wednesday, a New Mexico judge ordered Meta to pay a $25 billion penalty in a data-privacy case linked to Cambridge Analytica.marketscreener.com