The stock fundraising reached 95 billion USD, including 65 billion from ATM issuance, Meta's "additional issuance" supplements AI ammunition

Author: Bu Shuqing, Wall Street Journal

Meta Platforms is seeking to further broaden its financing channels to raise funds for its continuously expanding artificial intelligence (AI) business.

On October 26 local time, Meta announced the launch of a public offering of approximately $35 billion in common stock and mandatory convertible preferred stock, and plans to introduce a maximum of approximately $60 billion in an on-market stock issuance plan in the future, with a potential total financing scale of up to $95 billion.

This financing plan comes as Meta is making significant investments in AI infrastructure. As capital expenditures continue to rise, market attention is shifting from the growth potential of AI business to the sources of funding required for massive investments, cash flow pressures, and investment returns.

$35 Billion Public Offering, with an Additional $60 Billion Plan Pending

According to Meta's announcement, this public offering of approximately $35 billion includes about $22.5 billion in Class A common stock and about $12.5 billion in Series A mandatory convertible preferred stock. The common stock portion will be conducted through forward sale agreements, while the preferred stock portion involves the issuance of 250 million depositary shares.

In addition, Meta plans to launch an on-market stock issuance plan of up to approximately $60 billion after the Class C non-voting common stock begins trading, allowing the company to sell shares in phases based on market conditions. This plan is expected to start as early as the first quarter of 2027, but relevant agreements have not yet been signed, and the final issuance time, scale, and terms remain undetermined. Therefore, $95 billion is the upper limit of potential financing scale, not the confirmed amount of completed financing.

In terms of subscriptions, NVIDIA, AMD, and Broadcom intend to purchase up to $5 billion of Meta Class A common stock, with the relevant subscription prices and terms being the same as those for other investors. However, these intentions do not constitute binding purchase commitments.

High Capital Expenditures, AI Competition Tests Cash Flow

The backdrop of Meta's large-scale financing is its continuous increase in AI infrastructure investments.

The company expects that capital expenditures will reach $135 billion to $145 billion in 2026, aimed at expanding infrastructure and computing capacity to support AI applications in core businesses, as well as new businesses such as personal AI agents, enterprise products, and AI glasses.

Meta currently still possesses strong cash generation capabilities. The company's third-quarter revenue reached $64.6 billion, a year-on-year increase of 26%; as of the end of the third quarter, cash, cash equivalents, and marketable securities were approximately $82 billion. However, with the scale of AI investments continuously expanding, the massive capital expenditures may still increase the company's demand for external financing.

Previously, after Meta announced its financial report, the market shifted its focus from revenue growth to future spending pressures, and its credit default swap (CDS) indicators also rose to high levels. This reflects that investors are beginning to pay more attention to: even if the core advertising business performs strongly, how much funding is actually needed for the continuously expanding AI infrastructure, and whether the related investments can generate sufficient returns.

Meta stated that it will combine operating cash flow, investment-grade debt, strategic partnerships, and equity capital to provide funding support for AI and other business developments.

Equity Financing Alleviates Financial Pressure, but Dilution Issues Remain

Compared to relying solely on debt financing, equity financing can provide Meta with another source of funds, but it may also dilute the economic interests of existing shareholders.

The mandatory convertible preferred stock in this issuance will be converted into common stock in the future according to relevant terms, with the specific number of shares converted depending on the applicable conversion rate; while the future on-market issuance plan of up to $60 billion is intended to use Class C non-voting common stock. The non-voting arrangement helps the company control the impact of new shares on the voting rights structure while raising funds, but it does not mean that shareholders will not face economic interest dilution.

For Meta, raising funds is just the first step. The company has launched the personal AI agent Muse and the AI model Muse Wonder, and is attempting to integrate AI capabilities into advertising, consumer products, and enterprise services. However, the user growth and technical performance of new products ultimately need to be converted into sustainable revenue and cash flow.

As the AI competition enters a capital-intensive phase, the core test facing Meta is not just whether it can continue to expand computing power investments, but also whether it can convert the growing AI expenditures into commercial returns sufficient to cover construction and operating costs. The $95 billion financing plan provides the company with greater financial space, but its long-term value still depends on the actual returns of AI investments.