Meta closes $35 billion stock sale for AI buildout as shareholders sue over Zuckerberg's new share class

Meta Platforms closed a $35 billion sale of stock and preferred shares on October 29, part of a financing plan that could eventually raise as much as $95 billion for artificial intelligence infrastructure, even as a shareholder lawsuit in Delaware challenges a separate maneuver by chief executive Mark Zuckerberg to preserve his voting control of the company while tapping public markets for cash.

The offering closed two days after a group of pension funds sued Zuckerberg and Meta's board in the Delaware Court of Chancery, arguing that a newly created class of non-voting stock amounts to a "gift" that lets the Meta founder cash out billions of dollars without giving up his grip on the company. The two events are legally separate but financially intertwined: both stem from Meta's effort to fund an unprecedented build-out of data centers while keeping Zuckerberg's majority control intact.

A $35 billion raise, with chipmakers as buyers

According to Meta's October 26 announcement, the company launched two concurrent public offerings: roughly $22.5 billion of Class A common stock, sold through forward sale agreements with Morgan Stanley and Goldman Sachs, and about $12.5 billion in depositary shares representing a new series of mandatory convertible preferred stock, which Meta intends to list on Nasdaq under the ticker "METAM." A current report filed with the Securities and Exchange Commission confirms both pieces of the offering closed on October 29.

Notably, Nvidia, Advanced Micro Devices and Broadcom — all three of Meta's principal chip suppliers — were listed as "cornerstone investors" that had indicated interest in buying up to a combined $5 billion of the common stock on the same terms as other buyers, though Meta cautioned those indications are not binding commitments.

The $35 billion is only the first phase. Meta said it plans to launch an additional at-the-market program of roughly $60 billion once a newly authorized class of stock, called Class C common stock, begins trading — bringing the total potential raise close to $95 billion. The company intends to use the proceeds for "general corporate purposes," language that in its press release it tied directly to capital spending guidance of $135 billion to $145 billion for 2026, driven largely by four data-center "superclusters" each exceeding one gigawatt of capacity and a near-doubling of total infrastructure capacity year over year.

• $22.5 billion in Class A common stock sold via forward sale agreements
• $12.5 billion in mandatory convertible preferred stock (depositary shares, ticker METAM)
• Up to $60 billion more planned via an at-the-market program tied to the new Class C shares
• Up to $5 billion combined interest from Nvidia, AMD and Broadcom

A new share class built to protect Zuckerberg's control

The capital raise is bound up with a separate, more contentious corporate action. On October 19, Meta's board, acting on the unanimous recommendation of a special committee of independent directors, approved a recapitalization that creates a new, non-voting Class C common stock. Under the plan, detailed in a preliminary information statement filed with the SEC on October 21, every shareholder will receive one Class C share for each Class A or Class B share they already hold. Because Class C shares carry no vote, Meta can raise capital — including through the planned $60 billion at-the-market program — without diluting Zuckerberg's roughly 60.6 percent voting control, which rests on his Class B shares.

The filing also discloses the context for the timing: California's Proposition 40, a ballot measure going before voters on November 3, would impose a one-time 5 percent tax on the net worth of billionaires who were California residents as of January 1, 2026. If it passes and applies to him, Zuckerberg could face a tax bill in the billions of dollars. Under a "Founder Alignment Agreement" described in the filing, Zuckerberg and related entities will be able to freely sell 20 percent of the Class C shares they receive immediately, while the remaining 80 percent is released gradually, in increments tied to a "Stapling Condition" that ordinarily requires him to give up a matching voting share for each one sold.

Shareholders sue, calling the plan a "gift"

Two days before Meta's board approval became public knowledge through the SEC filing, and six days after the vote itself, two Steamfitters Local 449 pension funds and two individual investors filed a derivative and class action suit — Steamfitters Local 449 Pension Fund v. Zuckerberg, filed October 27 in the Delaware Court of Chancery — on behalf of Class A shareholders, who hold no vote on the matter. As reported by The Next Web, the complaint names Zuckerberg and all twelve of Meta's directors and seeks to block the recapitalization before it takes effect on January 19, 2027, when more than 2.5 billion Class C shares are due to begin trading.

"The recapitalization is a gift to Zuckerberg."

That is how the complaint characterizes the deal, according to reporting on the filing. The suit also alleges that the three special-committee members chosen to negotiate with Zuckerberg — Robert Kimmitt, Charlie Songhurst and Tony Xu — were not independent, noting that Xu had donated at least $2 million to a committee opposing the wealth tax, and that the committee never obtained a fairness opinion before agreeing to terms. The plaintiffs say Meta's own banker advised that the company could have raised roughly $700 billion through ordinary voting stock over several years while keeping Zuckerberg above the 50 percent control threshold, making the new share class unnecessary. They also argue that under the deal, Zuckerberg can immediately sell 20 percent of his new Class C shares — which plaintiffs value at about $23.8 billion at current prices — without surrendering a single vote.

Pressed by reporters, a Meta spokesperson said there "were many driving factors" behind the board's decision and that attributing it to any single one "would be misleading." The company has not conceded any wrongdoing, and no court has ruled on the claims. The suit comes less than two weeks after the same Delaware court blocked a similar non-voting share plan proposed by Cloudflare, a precedent the plaintiffs cite directly.

What is at stake for investors

For public shareholders, the dispute sits at the intersection of two trends reshaping big technology companies this year: the scale of capital now required to build AI data centers, and the governance trade-offs founders are extracting in exchange for funding that build-out without losing control. Meta's third-quarter earnings release put revenue at $64.6 billion, up 26 percent year over year, with net income of $9.9 billion, and the company said it generated $97 billion in operating cash flow through the first nine months of the year — figures Meta points to as evidence it can responsibly finance its AI ambitions through a mix of cash flow, investment-grade debt and now equity. Coverage of the stock's reaction to the recapitalization news noted shares fell more than 9 percent over the following three trading days, before recovering some ground around the equity offering's launch.

The case now moves to the Delaware Court of Chancery, where the plaintiffs are seeking expedited proceedings to resolve the dispute before the January 19 effective date. Meta, for its part, is proceeding with its financing plan regardless: the $35 billion offering has already closed, and the company says the larger at-the-market program will not begin until the first quarter of 2027, after Class C shares start trading — assuming the recapitalization survives the legal challenge intact.