Meta Platforms' widely anticipated equity capital raise could come as early as the next few weeks as it seeks to get ahead of other tech companies that plan to sell stock.
One potential source of equity funding for Meta is Berkshire Hathaway, which participated in Berkshire participated in Alphabet's $85 billion equity offering in June.
A Meta equity deal could total $40 billion or more as the company seeks to fund its AI buildout and reduce its reliance on debt financing -- both on- and off-balance sheet -- that has made bond investors wary and lifted Meta's debt yields to over 7% for 30-year bonds. That's a high yield for bonds with double-A credit ratings.
Meta said Wednesday as part of its earnings release that it will create a new class of nonvoting shares to enable the company to issue equity and not dilute founder and CEO Mark Zuckerberg, who has 60% voting control of Meta through nontraded super voting shares. His economic stake is about 14%.
The initial view on Wall Street after the news was that an equity deal might not be done until January, when the new nonvoting shares are due to be issued to Meta holders on a one-for-one basis in what amounts to a 2-for-1 stock split.
But Meta's filing Wednesday detailing the new class of stock highlighted an urgency to do an equity financing as the company may seek to get a head start on raising what it stated could be "hundreds of billions over a period of several years beginning as early as fall 2026."
The company said that "to finance its funding needs going forward it would be prudent for the Company to do so before even more companies have absorbed available capital in the market." Anthropic, for instance, is expected to file its S-1 soon ahead of what could be a large IPO before Thanksgiving.
Meta noted "an increasingly challenging environment for raising capital."
Evercore analyst Mark Mahaney told Barron's in an email that Meta could seek $50 billion to $100 billion in the next three to six months in mix of equity and debt financing.
JP Morgan analyst Doug Anmuth wrote in a client note that an equity deal could come sooner. The recent weakness in Meta shares and other AI-related stocks could add some urgency to that.
Meta shares are down 7% Thursday to $644 in the wake of the earnings news.
"The sooner the better in our view as it would remove the overhang and the Street now knows it will have nonvoting shares in January 2027, and Meta can still do a substantial equity raise before then without even coming close to impacting Mark's voting control," Anmuth wrote.
The Alphabet equity raise in which Berkshire participated could be a model for a Meta stock sale. As part of that earlier deal, Berkshire bought $10 billion of Alphabet's voting and nonvoting shares, which boosted its stake in the company to more than 100 million shares now worth over $30 billion.
Berkshire now finds itself in an enviable position as the tech industry faces trillions of dollars of financing needs over the coming years and higher debt costs from wary investors.
Berkshire is sitting on over $350 billion of cash and is looking for a way to deploy it under Greg Abel, who succeeded Warren Buffett as CEO at year-end 2025.
In any Meta equity offering, Berkshire could participate, especially if Meta offers attractively priced convertible bonds long favored by former CEO Warren Buffett. Berkshire prefers to get equity exposure rather than making a straight loan. When Berkshire participated in the Alphabet offering, it bought stock at a 6% discount to the market price.
Meta is now one of the cheapest stocks in the Mag Seven trading for under 20 times projected 2026 earnings. The company's earnings are growing at a double-digit annual rate. Berkshire historically has been a price-conscious value oriented investor.
Meta needs to raise equity to help fund its huge capital-spending program projected at about $140 billion this year and reduce its reliance on bond sales. The company's long-term debt is up $22 billion so far this year to $80 billion, and it has large off-balance sheet liabilities.
Here's how Meta could raise, say $40 billion, in equity, essentially following the Alphabet blueprint from June.
It could issue $20 billion of its equity or a mix of class A equity and convertibles and then agree to sell another $20 billion of the new nonvoting C shares once that stock is distributed to investors in January -- or sooner -- through an at-the-market offering known as an ATM where new stock is sold through an underwriting group to investors over time.
Berkshire stayed clear of tech for a long time under Buffett. But a decade ago with Apple and more recently with Alphabet, it has shown a healthy appetite for tech when the price is right.
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