Meta offers $35 billion in new shares
The company is selling Class A stock and convertible preferred shares as it plans up to $145 billion in capital spending this year. Nvidia, AMD and Broadcom signaled interest.
Two bank-backed public offerings worth about $35 billion came out of Meta on Monday, according to the sales prospectus it filed with the SEC, the U.S. securities regulator.
The larger one, about $22.5 billion, is Class A common stock tied to forward sale contracts with Morgan Stanley Capital Services and Goldman Sachs. Meta would not get the cash up front. It would collect when the contracts settle, no later than Nov. 19, 2027.
The second, about $12.5 billion, is depositary shares, each worth one-twentieth of a Series A mandatory convertible preferred share. Meta is offering 250 million of them at $50 apiece, and they would convert on Aug. 15, 2029. The proceeds would go to general corporate purposes, the preliminary prospectus supplement says.
Nvidia, AMD and Broadcom have expressed non-binding interest in buying up to $5 billion of the Class A stock between them, on the same terms as other investors.
Each offering carries a 30-day overallotment option: up to $3,375 million more in Class A stock and up to 37.5 million more depositary shares.
A quarter of its capital spending
The deal equals roughly a quarter of the top end of the capital spending Meta expects for 2026, $135 billion to $145 billion (a calculation from the filing's figures). In the third quarter the company reported revenue of $64.6 billion, up 26% from a year earlier, net income of $9.9 billion and about $82 billion in cash and securities.
The two instruments carry risk differently. Buyers of the convertible preferred give up some of the upside if the stock soars and have no guarantee of getting back their $50 if it falls, the prospectus warns. The forward contracts, meanwhile, push the arrival of Meta's cash as far out as November 2027.
The final price, the dividend rate and the conversion rates are still blank and will be set when the offering is priced. The preferred would pay dividends every quarter, from Feb. 15, 2027, through Aug. 15, 2029. Meta could cover them with cash, Class A shares or a mix.
Issuing new shares can dilute existing shareholders. There is no direct effect on Mexico.
One more step is coming: a program known as an at-the-market offering, or ATM, to sell up to $60 billion of Class C stock on the open market. It would not start before the first quarter of 2027, and no agreement has been signed.
