Meta seeks $95 billion equity financing for AI expansion

Meta is seeking up to $95 billion in new equity financing, with the first third coming from Class A common stock and subsequent tranches potentially using new Class C non-voting shares to protect Mark Zuckerberg's voting power. This marks a strategic shift from 2022 to 2025, when the company repurchased $105 billion in stock at an average price of approximately $300 per share. The new issuance dilutes minority shareholder voting rights, a practice also seen at Alphabet, where founders Larry Page and Sergey Brin hold 51% voting control, and at SpaceX, where Elon Musk maintains high leverage. The move raises market concerns about stock price support previously provided by buybacks and the source of capital for massive AI infrastructure spending.

Meta reported a 26% increase in quarterly revenue to nearly $65 billion and a profit of nearly $10 billion, a near quadrupling year-over-year. Despite these results, the stock fell 10% to $640, its lowest level in weeks, driven by a negative cash flow of over $2 billion. This was caused by CEO Mark Zuckerberg's announcement of $135 billion in AI infrastructure investments for the current year. While JP Morgan raised its price target to $900-$940, the market reacted negatively to the cash burn, with investors fearing the sustainability of such high capital expenditures without immediate profit realization. The AI trade has seen a positive market reaction following Anthropic's filing, reversing previous concerns about AI unfinanceability, but Meta's specific cash flow issues remain a point of contention.