Meta is taking significant steps in the realm of artificial intelligence and has plans to introduce a new type of stock to support this initiative.
On Wednesday, during the announcement of its third-quarter financial results, reports emerged indicating that the company may issue non-voting shares, which would not grant shareholders a say in corporate decisions, to fund its AI developments.
Meta confirmed this information during its earnings call. CFO Susan Li stated that the company intends to “create a new class of non-voting capital stock, which will be distributed to all existing shareholders through a stock dividend.”
Li elaborated that this new share class is designed to generate publicly traded non-voting stock that can be utilized for capital raising, employee remuneration, acquisitions, and various corporate needs, while maintaining the voting rights of current Class A and B shareholders.
This share structure will help uphold the company’s “founder-led” approach, Li noted, while also broadening Meta’s options for funding and allowing greater flexibility to invest in the robust momentum seen across its operations due to AI advancements.
Meta reported strong earnings in the latest quarter, surpassing analysts’ expectations. The company generated $64 billion in revenue, marking a 26% increase year over year. However, its costs and expenses also rose significantly, with a year-over-year increase of 68%.
The Reality Labs division, which handles Meta’s augmented reality glasses, virtual reality headsets, and associated software, continues to operate at a loss, although the losses are decreasing. In its earnings report, the company projected that Reality Labs’ losses will decrease to between $18 billion and $19 billion by 2025.
In the past year, Meta has heavily invested in AI, releasing multiple AI models such as Muse Spark and Muse Glimmer earlier this year. Recently, it introduced Muse Wonder and an open-weight version of Muse Spark, allowing outside developers to utilize its foundational parameters. Additionally, a software development tool called Muse Code was launched. At this year’s Meta Connect event, the company unveiled a new series of friendly avatars for its AI assistant, Meta Muse, enhancing the relatability and appeal of its AI services.
The reception for these AI products has been positive. “In just a month and a half, over 10 million users in the U.S. and Canada have activated Muse personal agents,” CEO Mark Zuckerberg shared during the earnings call. He noted that the product growth remains strong, frequently securing the top position in the App Store.
“With Muse achieving clear market fit, we are transitioning into a new phase focused on scaling the product,” Zuckerberg mentioned, adding that the company aims to enhance its appeal to eventually cater to billions of users.
However, the company also acknowledged potential challenges on the horizon, particularly regarding ongoing legal and regulatory issues. Li stated, “We are keeping a close watch on active legal and regulatory matters that could have significant effects on our business and financial health.” She noted that growing scrutiny surrounding youth-related topics in several markets could lead to several youth-related trials in the coming months in the United States.
