Meta (META) reported record sales on Wednesday, Oct. 21. Then it said something new. It will create a class of stock that can't vote. Every owner gets one new share for each old one, on Jan. 19, 2027. It looks like a 2-for-1 split. It's also a way to raise cash for AI without changing who's in charge.
The quarter itself was strong. Revenue was $64.6 billion, up 26% from a year earlier. Thursday's paper printed $64.2 billion, and Friday's paper corrected it. Net income was $9.8 billion, well under the $17.2 billion analysts expected. A $9.9 billion legal charge for settling social-media-harm lawsuits dragged it down. Meta expects $73 billion to $76 billion in revenue this quarter. It raised the low end of this year's capital spending to $135 billion, with the top still $145 billion. Free cash flow was negative $2.1 billion. That's the first negative quarter since Meta went public, though analysts had braced for worse. The stock rose 4% after hours.
The filing is where it gets interesting. Mark Zuckerberg controls Meta through super-voting shares. California voters will decide on a new wealth tax. If he had to sell voting stock to pay it, his control would shrink. The filing says he had talked about moving. Under the plan, he can sell 20% of his new nonvoting shares right away. He also committed to live in the same state as Meta's headquarters for at least eight years. Meta's release said the new class “will continue the founder-led model that has driven the company's success.” Meghan Bobrowsky reported the story for the Journal.
A $25 billion bill, and the stock rose
The same Wednesday, a New Mexico judge ordered Meta to pay $25 billion. A jury had found Meta misled users about privacy, under the state's unfair practices law. It counted about 44 million violations, at up to $5,000 each. The state had asked for $35 billion to $40 billion. Meta's lawyer called the request unconstitutional and suggested $345 million to $3.5 billion instead. Meta will appeal. The stock closed up 0.47% that day at $697.52. Then Thursday came. The cheer over record sales faded. The worry became how Meta would pay for AI, with about $825 billion of future spending commitments. Meta fell 7%, about $124 billion, and took the AI trade down with it.
Our read
This is an Investments/Risk IN04 story. A nonvoting share gives you a slice of the profits and none of the say. Meta already runs that way, since its founder holds the super-voting stock. The new class keeps it that way, and it makes selling stock easier. A stock dividend adds shares, not value. Your two shares should start out worth about what one was. If Meta later sells more Class C shares to fund AI, your slice gets a little smaller each time. That's the trade you accept when you own a founder-led company. Meta is held at weight in 20 books. Nothing added. Our verdict is hold.
Here's the connection to your own plan. If you own Meta shares in a brokerage account, the new Class C shares should arrive around Jan. 19, 2027. Your share count doubles. Your value doesn't. The check to make this week is to look up what you paid for your Meta shares, and when, and save it. After the dividend, your cost basis generally gets split across the two classes. You'll want your own record to check your broker's math. If you own Meta only through an index fund, the fund handles it. Bring the statement to a review and we'll go through it together.