Meta could have raised about $700 billion in equity capital before Zuckerberg lost majority control, a filing shows. The new share class will raise money without diluting him—and allow him to foot a potential bill in California.
Meta could have raised about $700 billion in equity capital before Zuckerberg lost majority control, a filing shows.
The new share class will raise money without diluting him—and allow him to foot a potential bill in California.
Meta CEO Mark Zuckerberg intends to maintain control over the company he founded in 2004 and a new class of stock will help him do just that.
On Wednesday as Meta released third quarter earnings results, the company announced that it would issue a new share class of Class C stock. The share class, which is technically a one-for-one stock dividend of new Class C shares, will be distributed to all shareholders. It was conceived following months of extensive negotiation that grew contentious at times between Zuckerberg and board members, including DoorDash CEO Tony Xu, Ambassador Robert Kimmitt, and ex-Microsoft executive Charles Songhurst. Xu disclosed his personal friendship with Zuckerberg but said it wouldn’t impair his judgement. At one point, the committee even talked about resigning if they couldn’t come to a resolution.
According to a Meta filing with the Securities & Exchange Commission, Zuckerberg wanted to be able to maintain his voting control, meet his pledges to fund the Chan Zuckerberg Initiative with his Meta stock, and be prepared to pay billions to the state of California if a proposed wealth tax is approved by voters in November.
The proposed wealth tax, however, came around the same time as a decision by the company in late 2025 that Meta needed to raise outside capital to help fund the AI boom. Zuckerberg holds about 60.6% of voting control at Meta, while his stake is about 13.4% of the company.
Like other major tech companies, Meta maintains a dual-class share structure, where Class A shares trade on Nasdaq as a one-vote-one-share stock. Conversely, Zuckerberg’s holdings are made up of mostly Class B shares, which carry 10 votes per share, which is how he maintains majority control. The condition on the supercharged Class B shares is if Zuckerberg sells them, they convert to Class A. Many companies require this condition for super-voting shares to ensure that outsiders don’t start to gain control of companies from founders seeking liquidity.
The rub is if Meta issues more Class A shares, which it does in order to make equity grants to employees, make acquisitions or raise capital, Zuckerberg’s stake gets diluted. Meta has long offset the dilution with stock buybacks, which helped buoy his voting power from 53.7% in 2013 to 60.6% now. But the buybacks also drain cash that Meta wants to use to fund the AI buildout. The company’s SEC filings show Meta repurchased $26.3 billion in Class A stock in 2025, but hasn’t bought back any shares in four straight quarters. Meanwhile, in the first nine months of this year, Meta posted $21 billion in stock-based compensation.
Meta’s third quarter results, released Wednesday, help explain why the share class came about. Revenue this quarter rose 26% to $64.6 billion while capital expenditures hit $34.9 billion. Meanwhile, free cash flow dipped to negative $2.1 billion, compared to $10.6 billion a year ago. Meta also forecast capex for 2026 at $135 billion to $140 billion, raising the low end up from $130 billion. Meta forecast fourth quarter revenue of $73 billion to $76 billion.
As a solution to the crunch, the new Class C stock will carry no votes, the company said. Meta will use them to pay employees, fund acquisitions, and raise capital without Zuckerberg losing majority voting control. He can also sell some of them without giving up votes, and more importantly, pay a potentially massive wealth tax bill looming in California without having to tap into his Class B shares. His current level of control is such that he can personally elect all the directors on the board and determine most of the issues proposed to shareholders for a vote, which won’t change following the recapitalization. With the new shares, Zuckerberg can sell 20% right away, and the remaining 80% are “stapled”—meaning he can sell them only if he sells or converts an equal number of his voting shares.
Averytin News Financial update.