Meta burns cash for the first time in over a decade and creates non-voting Class C shares to fund AI

Meta Platforms said on Wednesday, 21 October, that third-quarter revenue rose 26% to $64.6 billion, and it forecast fourth-quarter revenue of $73-76 billion.

Spending outruns cash

Capital expenditure, including finance-lease payments, reached $34.91 billion in the quarter. Operating cash flow was $32.79 billion, leaving free cash flow of minus $2.12 billion, compared with plus $10.63 billion a year earlier, according to the company. Reuters columnist Mike Dolan noted it was Meta’s first quarterly cash burn in more than a decade.

Net income was $9.86 billion ($3.83 per share). Results include a $9.89 billion charge for the agreement with 52 state attorneys general over teen mental health litigation; excluding it, Meta said, earnings would have been $7.40 per share. Headcount fell 15% year on year to 66,775.

New Class C stock

Meta said it is establishing a new class of non-voting Class C common stock, effective in January 2027. CNBC reported that the shares will be distributed to existing shareholders as a dividend, effectively a two-for-one split, and Meta can later use the class to raise capital. Founder Mark Zuckerberg highlighted the launch of Muse and Muse Wonder, which he called the company’s first frontier model.

The stock briefly rose after the results but was down about 2-3% in premarket trading on Thursday, Reuters reported, amid a broader sell-off in technology shares.