Meta proposed a $95 billion equity financing plan Monday to fund its artificial intelligence expansion. In its launch release, the company announced $35 billion of underwritten offerings and outlined a larger, still-proposed program to sell non-voting shares into the market over time. The fundraising would help finance infrastructure spending that exceeded cash generated by its business last quarter.

In the quarter ended September 30, Meta’s free cash flow was negative $2.12 billion, compared with positive $10.63 billion a year earlier.

The decision “reflects the eye-watering levels of investment required to keep up in the AI arms race,” said Ben Wood, senior partner at CCS Insight. Meta shares finished Monday down 1.9% after briefly turning positive.

What Changed

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Suppliers consider buying

Nvidia, AMD and Broadcom have expressed nonbinding interest in buying up to $5 billion of Class A shares collectively, at the same price and terms as other buyers.

Each may purchase more, fewer or no shares. If they participate, companies selling Meta chips would also become investors helping finance its expansion.

Cash arrives in stages

The offerings launched October 26 total approximately $35 billion: $22.5 billion of Class A common stock through forward sale agreements and $12.5 billion of depositary shares representing mandatory convertible preferred stock.

Meta does not expect to receive proceeds initially from the common stock offering. Banks sell shares now; Meta receives cash when it delivers shares to settle the agreements, on dates it chooses by November 19, 2027.

The preferred stock is scheduled to become common shares in 2029, unless converted earlier. Its dividend rate and conversion terms will be set at pricing. Although Meta frames the financing plan around AI investment, net proceeds from both offerings are designated for general corporate purposes.

Spending and funding

Meta spent $34.91 billion on companywide capital expenditures, including finance-lease principal payments, in the quarter ended September 30, against $32.79 billion of operating cash flow.

The October 21 earnings release raised the bottom of full-year capital spending guidance from $130 billion to $135 billion, while leaving the ceiling at $145 billion.

Meta still held $82.45 billion in cash, cash equivalents and marketable securities at September 30. Third-quarter revenue grew 26% from a year earlier to $64.60 billion.

Meta says it intends to fund its investments through a mix of operating cash flow, investment-grade debt, partnerships and equity. It calls the equity offerings and proposed market-sale program “a complementary source of capital” that would further diversify its funding sources.

The company says AI is improving advertising performance and engagement. Meta’s earnings outlook says its newer AI investments will take longer to generate returns than spending on its core business.

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Non-voting shares come later

The largest proposed component is an approximately $60 billion at-the-market program using Class C non-voting common shares. Such a program would allow Meta to sell shares periodically into the market.

No program agreement has been signed. Final timing, size and terms remain undetermined, and Meta has given no assurance that it will establish the program or sell the proposed amount. It is not expected to begin before the first quarter of 2027, after Class C shares start trading.

The Class C structure, approved October 21, is intended by Meta to preserve Chief Executive Mark Zuckerberg’s founder-led model. Issuing shares without votes protects voting control but still reduces existing holders’ proportional economic ownership when additional shares are sold.

“We expect investors to continue to question the financing and potential for future capital raises,” William Blair analysts wrote.

Frequently Asked Questions

Has Meta already raised $95 billion?

No. The plan includes approximately $35 billion of underwritten offerings and a proposed $60 billion at-the-market program. Meta expects no initial proceeds from the Class A forward sale; it receives cash when it delivers shares to settle the agreements.

What makes up the initial offerings?

Approximately $22.5 billion of Class A common stock through forward sale agreements and $12.5 billion of depositary shares representing mandatory convertible preferred stock. The preferred stock is scheduled to become common shares in 2029, unless converted earlier.

Are Nvidia, AMD and Broadcom committed to investing?

No. They expressed nonbinding interest in purchasing up to $5 billion collectively, at the same price and terms as other buyers. Each may purchase more, fewer or no shares.

When would the Class C share program begin?

Meta does not expect it to begin before the first quarter of 2027, after the non-voting Class C shares start trading. No program agreement has been signed, and final timing, size and terms remain undetermined.

Do non-voting shares prevent dilution?

No. Non-voting shares preserve voting control, but selling additional shares still reduces existing holders' proportional economic ownership. The Class C structure is intended to preserve Mark Zuckerberg's founder-led model.

AI-generated summary, reviewed by an editor. More on our AI guidelines.

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Editor-in-Chief and founder of Implicator.ai. Former ARD correspondent and senior broadcast journalist with 10+ years covering tech. Writes daily briefings on policy and market developments. Based in San Francisco. E-mail: editor@implicator.ai