Meta to raise up to US$95 billion in equity to fund costly AI expansion

Meta Platforms has announced plans to raise up to US$95 billion in equity to fund its extensive AI-related infrastructure expansion. The company intends to launch public offerings of approximately US$35 billion in common stock and convertible preferred stock, along with an at-the-market share sale program of up to US$60 billion. This move comes as Meta intensifies its investments in data centres, computing capacity, and AI products to compete with leading AI firms like OpenAI and Anthropic.

As of September 30, 2023, Meta had US$82.45 billion in cash, cash equivalents, and marketable securities, which surpassed its long-term debt of US$80.92 billion. The company has committed to spending about US$825 billion in the future, primarily driven by its investments in data centres, AI infrastructure, and cloud computing power.

Meta's chip partners, including Nvidia, Advanced Micro Devices, and Broadcom, have shown interest in purchasing up to US$5 billion of the company's Class A common stock in the upcoming offering. Additionally, the company recently increased its annual spending forecast to between US$135 billion and US$145 billion, up from the previously expected range of US$130 billion to US$145 billion.

In the third quarter, Meta reported a cash burn of US$2.12 billion, marking its first negative free cash flow in over a decade, compared to a positive cash flow of US$10.63 billion in the same period a year prior. Despite the cash burn, the company's third-quarter revenue of US$64.6 billion exceeded Wall Street's estimates of US$63.37 billion. Meta is projecting fourth-quarter revenue between US$73 billion and US$76 billion.