Meta Platforms reported $64.601 billion in third-quarter revenue, up 26% from a year earlier, while unveiling a recapitalization that would give holders of its existing stock a newly created, publicly listed non-voting Class C share. The combination puts two of Meta’s current priorities in view: preserving the voting structure of its existing equity while funding an increasingly expensive artificial-intelligence buildout.
The company’s reported profit was heavily affected by a $9.89 billion legal-proceedings charge tied to its August agreement with 52 U.S. attorneys general over litigation concerning teen mental health and social media. Meta posted net income of $9.860 billion, or $3.83 a diluted share, for the quarter ended Sept. 30, compared with $2.709 billion, or $1.05 a share, a year earlier. Its third-quarter results release also narrowed the company’s 2026 capital-expenditure outlook to $135 billion to $145 billion.
How the Class C transaction would work
The proposal is more complicated than a conventional stock split. Meta’s board approved the creation of a Class C common stock that would carry no voting rights. It also declared a contingent, one-time dividend of one Class C share for every outstanding Class A or Class B share. Investors would retain their existing Class A or Class B stock and receive the new Class C shares, rather than seeing their current shares divided into smaller units.
Meta has not set the dividend’s record date or payment date. The amended corporate charter needed for the structure is intended to take effect Jan. 19, 2027, subject to the company’s stated process. After the dividend is issued, Meta expects the Class A market price to reflect the economic effect of a two-for-one split. That expected pricing effect explains why some coverage, including a Yahoo Finance report, has used stock-split shorthand. Legally, however, the proposal is a stock dividend tied to a new class of non-voting shares.
The distinction is material for governance. Meta says the distribution will not alter any shareholder’s voting power. The company said the Class C shares could be used as currency for capital raising, employee compensation, acquisitions and other corporate purposes without diluting voting power attached to the existing Class A and Class B shares.
Meta’s preliminary Schedule 14C information statement shows that the board approved the recapitalization on Oct. 19 after a unanimous recommendation from its special committee. Entities identified as consenting shareholders approved it by written consent the next day and held about 56.1% of Meta’s total voting power as of Oct. 20. The filing remains preliminary, but it provides the formal mechanics behind the company’s earnings-day announcement.
Legal charge obscures a stronger operating measure
Meta reported operating income of $12.988 billion, down 37% from the prior-year quarter, as costs and expenses rose 68% to $51.613 billion. The company identified the $9.89 billion legal charge as part of those expenses. It relates to an agreement announced in August with 52 state attorneys general; Meta said the agreement provided for payments of up to about $18.59 billion, while the charge recognized in the third quarter was the lower $9.89 billion amount.
Meta also supplied a useful measure of the charge’s effect on the quarter: excluding it, operating income would have been $22.88 billion and diluted earnings per share would have been $7.40. Those figures are not reported GAAP results, and they do not remove other costs or risks facing the business. They do show why revenue growth and the headline decline in operating income point in different directions this quarter.
Revenue was driven by Meta’s Family of Apps segment, which generated $63.78 billion, while Reality Labs recorded $470 million in revenue and a $4.43 billion operating loss. Meta said its AI investments are producing incremental advertising revenue through engagement, recommendation and monetization improvements, but characterized returns from other AI investments as taking longer. Those are company assessments rather than independently established measures of the technology’s financial return.
AI infrastructure keeps capital needs unusually high
Capital expenditures, including principal payments on finance leases, totaled $34.91 billion in the third quarter. That spending is separate from the accounting costs and expenses that included the legal charge, though both figures underscore the scale of resources being committed across Meta’s operations and infrastructure plans.
The midpoint of Meta’s new full-year capital-expenditure range is $140 billion. A simple annualization of the $34.91 billion third-quarter figure produces roughly $139.6 billion, placing the annual outlook broadly in line with that single-quarter pace. It is not a forecast for future quarters: spending can vary with construction schedules, equipment deliveries and financing arrangements. Still, the comparison indicates that Meta expects its capital program to remain near recent levels through year-end.
Meta forecast fourth-quarter revenue of $73 billion to $76 billion and lifted its full-year expense outlook to $175 billion to $179 billion. Those are company projections, not booked results. The proposed Class C structure gives Meta an additional non-voting equity instrument as it manages those investment demands, while leaving the voting rights of current Class A and Class B holders unchanged.
