Meta Plans a Record USD 95 Billion Equity Raise for AI
Meta Platforms plans to raise up to USD 95 billion in its largest ever equity fundraising, as the social media group spends aggressively on AI infrastructure. The company has launched public offerings worth about USD 35 billion in common and preferred stock. It also intends a separate at the market share sale programme worth up to USD 60 billion.
The offering is among the biggest ever by an AI company, and it splits into two parts. The larger programme will start after Meta's new non voting Class C shares begin trading, which the company expects early next year. It has not settled the timing or the terms of that sale.
But Nvidia, AMD and Broadcom have signalled interest of up to USD 5 billion in total for Class A shares. That involvement has added to concern about a circular flow of capital in the AI industry, in which chip suppliers help to finance the expansion of one of their biggest customers.
But the appetite is not unconditional. Meta shares fell about 1.4 per cent in morning trading and stayed lower through the session. Analysts at William Blair said they expect investors to keep questioning the financing and the potential for further capital raises, even as the move reinforces Meta's confidence in long term AI returns.
The fundraising marks a shift among large technology companies, which once funded their investments from cash and now tap debt markets and equity. Alphabet increased the size of its own equity offerings to USD 84.75 billion earlier this year, and the shift has accelerated since.
And Meta has committed about USD 825 billion in future spending, driven mainly by data centres, AI infrastructure and cloud computing capacity. That push has eroded a historically strong cash position.
And the numbers show the strain. Meta reported a USD 2.12 billion cash burn in the third quarter, its first negative free cash flow in more than a decade, against a positive USD 10.63 billion a year earlier. It held USD 82.45 billion in cash, equivalents and marketable securities at the end of the quarter, with long term debt of USD 80.92 billion.
The company raised the lower end of its annual capital expenditure forecast last week to a range of USD 135 billion to USD 145 billion. Its consumer AI agent Muse and a new series of models have helped to justify some of that spending. Early demand for both has been strong enough to keep the argument for the buildout alive, even as the cash position weakens.
But Meta will issue Class C common stock early next year, a structure that works out as a two for one split. The aim is to fund acquisitions and keep senior talent while preserving chief executive Mark Zuckerberg's control of the company.
Zuckerberg will also receive Class C shares he can sell to help pay a potential California billionaire wealth tax, in exchange for a commitment to remain in the state. The structure keeps voting power concentrated while the company raises outside capital.
Meta plans to raise up to USD 95 billion, split between USD 35 billion in offerings and a USD 60 billion share sale programme
But Nvidia, AMD and Broadcom have signalled interest of up to USD 5 billion in total
Meta shares fell about 1.4 per cent as investors weighed the financing
The company burned USD 2.12 billion in cash in the third quarter, its first negative free cash flow in over a decade
Class C shares will start trading early next year and carry no voting rights
Source: Reuters
