Meta is intensifying its efforts in artificial intelligence and is planning to introduce a new type of stock to finance these initiatives. On Wednesday, during the announcement of its third-quarter earnings, it was reported that the company may issue non-voting shares, which would not grant shareholders a say in corporate governance, to support its AI ambitions. This information was confirmed during Meta’s earnings call. The company’s Chief Financial Officer, Susan Li, stated that Meta intends to “create a new class of non-voting capital stock, which will be distributed to all existing shareholders through a stock dividend.” Li further explained that this new category of shares is designed to facilitate the creation of a publicly traded non-voting stock that can be utilized for capital raising, employee compensation, acquisitions, and other general corporate purposes, while safeguarding the voting rights of current Class A and B shareholders. She emphasized that these shares would help the company maintain its existing “founder-led structure.” Additionally, they will enhance its “funding tools and provide flexibility to invest in the unprecedented momentum we are experiencing across all sectors of our business, driven by AI.”
Meta reported robust earnings for the past quarter, surpassing Wall Street forecasts. The company generated $64 billion in revenue, reflecting a 26% increase compared to the previous year. However, its costs and expenses also surged by 68% year over year. The Reality Labs division, which oversees Meta’s augmented reality glasses, virtual reality headsets, and VR software, continues to incur losses, although these have diminished over time. In its earnings report, the company projected that the division’s losses would decrease from current levels to between $18 billion and $19 billion by 2025.
Over the past year, Meta has significantly advanced its AI initiatives. The company has launched several AI models, including Muse Spark and Muse Glimmer earlier this year. Recently, it introduced Muse Wonder and Muse Spark Open, an open-weight model with publicly available underlying parameters for external developers to utilize and build upon. Additionally, Meta unveiled a coding assistant for software developers named Muse Code. During this year’s Meta Connect event, the company introduced a new series of endearing avatars for its AI assistant, Meta Muse, aiming to make its AI services more relatable and shareable on social media.
According to CEO Mark Zuckerberg, these AI products are performing well. “In just a month and a half, more than 10 million people in the U.S. and Canada have set up Muse personal agents,” he stated during Wednesday’s earnings call. “Growth continues to be strong, and we have been number one in the App Store almost every day.” He added, “Now that Muse has clear product-market fit, we are entering a new phase that is more operational and focused on scaling it,” asserting that the company anticipates expanding the product’s reach to ultimately “serve billions of people.”
However, the company also acknowledged that challenges remain, particularly concerning ongoing regulatory and legal matters. “We continue to monitor active legal and regulatory issues that could significantly impact our business and financial results,” Li remarked. “For instance, we are facing scrutiny regarding youth-related matters in several markets and have multiple youth-related trials scheduled in the upcoming months in the United States.”
