Meta Platforms plans to issue non-voting Class C shares to existing shareholders, providing one share for every one currently held. This strategy allows the company to raise capital, fund acquisitions, and manage employee compensation without diluting the voting power of current stakeholders. The initiative is scheduled to take effect on January 19, 2027.
The decision follows a period of significant capital expenditure, with third-quarter spending reaching $34.91 billion, which exceeded operational cash flow. The company reported a negative free cash flow of $2.12 billion for the quarter, compared to a positive $10.63 billion in the same period last year. Revenue for the quarter rose 26% year-over-year to $64.6 billion.
CEO Mark Zuckerberg has entered into a Founder Alignment Agreement, which restricts his ability to sell Class C shares. Under the terms, 80% of his new shares are subject to sale limitations that require a corresponding conversion or sale of his voting stock. These restrictions will gradually lift by 2.5% each quarter as long as he remains in his leadership role.
Meta reported holding $82.45 billion in cash and marketable securities as of September 30. While the company has raised $24.91 billion in long-term debt this year, it has ceased Class A share buybacks. Meta has committed to matching future Class A buybacks with at least an equivalent number of Class C repurchases once the new shares are issued.
