Meta to raise up to $95-billion in equity to fund costly AI expansion — SkimNews
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- Meta plans its largest-ever equity fundraising: about $35 billion in public offerings of common and preferred shares, plus an at-the-market program of up to $60 billion. The company expects the new non-voting Class C shares to begin trading in the first quarter of 2027, after which it would launch the larger sale program; timing and terms are not finalized.
- Nvidia, AMD and Broadcom have expressed up to $5 billion in combined interest in Meta Class A shares, adding to concerns about circular AI capital flows as chip suppliers help finance a major customer’s expansion.
- Meta reported $2.12 billion in negative free cash flow for the third quarter—the first negative quarter in over a decade—versus $10.63 billion in positive free cash flow a year earlier.
- Meta has committed about $825 billion in future spending, primarily on data centers, AI infrastructure and cloud computing power, and last week raised the lower end of its annual capital-expenditure forecast to a $135 billion-$145 billion range.
- Alphabet increased the size of its equity offerings to $84.75 billion earlier this year, as big technology companies increasingly turned to debt markets and equity to bolster AI infrastructure.
- William Blair expects investors to continue questioning Meta’s financing and potential future capital raises; Meta shares fell about 1.4% in morning trading.
- Mark Zuckerberg can sell Class C shares to help pay a potential California billionaire wealth tax in exchange for committing to stay in California; Meta’s January 2027 issuance effectively creates a two-for-one split and is aimed at acquisitions, top talent and preserving his control.
Why it matters: Meta investors face continued financing scrutiny from William Blair, who expects investors to keep questioning the financing and future capital raises after the $95 billion plan and a $2.12 billion quarterly cash burn. Nvidia, AMD and Broadcom’s interest of up to $5 billion also links chip suppliers to a customer whose annual capex forecast is $135 billion-$145 billion.
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