Meta beats revenue forecasts and plans new nonvoting shares
Meta's sales rose 26% to $64.6 billion in the third quarter, beating forecasts, CNBC reported. The company also plans a new class of nonvoting shares, CNBC and The Verge reported. The Verge said the stock could help pay for AI, deals and staff pay.
Meta reported third-quarter revenue of $64.6 billion on Wednesday, up 26% from a year earlier, according to CNBC. Analysts had expected $63.37 billion, CNBC reported. The stock rose about 2.5% in late trading.
Meta also said it will create a new class of nonvoting Class C stock, CNBC and The Verge reported. The shares will go to all current shareholders as a dividend, CNBC reported. It said the move works like a two-for-one stock split. The change takes effect in January, and trading will start in 2027, the outlets reported.
The Verge said the new shares could help pay for AI work, possible deals and employee pay. "The scale of investment required to compete, sustain growth, expand infrastructure, and pursue new strategic initiatives amidst the AI transformation taking place in the industry is significant," Meta said in its release, according to The Verge.
For the current quarter, Meta expects revenue of $73 billion to $76 billion, CNBC reported. Analysts had expected $73.73 billion, according to LSEG data cited by CNBC.
Meta now expects to spend $135 billion to $145 billion on capital projects this year, The Verge reported. CNBC said that range is narrower than the earlier forecast.
Reality Labs, the unit that makes virtual reality gear and AI devices, had $443 million in sales and lost $4.13 billion, CNBC reported. Analysts polled by StreetAccount had expected a loss of $4.54 billion, it said.
Meta's results included a $9.9 billion legal charge, the company said in its release. CNBC reported earlier that analysts warned a charge tied to a settlement with state attorneys general could weigh on profit.
Chief Financial Officer Susan Li said on a call with analysts that the workforce shrank 12% from the prior quarter to 66,000 people, CNBC reported. Meta cut about 8,000 jobs over the summer, CNBC said.
"We hit major milestones this quarter toward delivering personal superintelligence for everyone," CEO Mark Zuckerberg said in the release, according to CNBC.
What we know: Revenue beat forecasts, and Meta plans a new class of nonvoting shares.
What we don't: How Meta will use the new shares and how investors will respond over time.
Where outlets agree CNBC and The Verge report that Meta will create a new class of nonvoting Class C stock that begins trading in 2027, alongside third-quarter results.
Where they differ CNBC and The Verge don't conflict on the facts, though CNBC frames the new shares as a stock dividend that works like a split while The Verge stresses their use to fund AI, deals and pay.