Meta Platforms lost more than $124bn of its stock market value on Thursday after the owner of Facebook and Instagram told investors it would need to raise “hundreds of billions of dollars” over the coming years to fund its artificial intelligence plans, starting as early as this autumn.
Meta shares fell 7 per cent, although the company is still worth almost $1.65trn. The scale of its investment revived concerns about the sustainability of technology companies’ borrowing to fund spending on data centres and computer chips, which totals more than $1trn.
The Nasdaq index in New York dropped 2.6 per cent, its biggest one-day fall since the start of June. Shares in SpaceX, Elon Musk’s rockets and AI group, fell 9.1 per cent, and Nvidia, the chipmaker and the world’s largest company, fell 4.4 per cent.
Meta said it had committed to spend about $825bn on data centre and energy infrastructure leases, computing power, hardware and cloud capacity. That compares with the near-$700bn of future spending commitments it reported in July.
Meta’s third-quarter accounts show revenue of $64.6bn for the three months to 30 September, up from $51.2bn a year earlier.
The commitments follow plans to cut about 8,000 jobs, reported by Reuters in April. On Wednesday a New Mexico judge ordered Meta to pay $25bn over its handling of Facebook user data, which Meta plans to appeal.
The sell-off came as it emerged that Meta has agreed to help shield Mark Zuckerberg, its founder and chief executive, from a potential tax bill should California vote for a billionaire wealth tax.
Meta will award Zuckerberg, 42, non-voting shares that he could sell to pay any tax liability without diluting his control. The deal came after he told the board he was considering leaving California because of the proposed tax.
The board plans to award him Class C shares, a portion of which he can sell immediately.
Californians vote on 3 November on the tax, proposed by a health union. It would impose a one-off 5 per cent tax on the assets of any billionaire living in the state on 1 January 2026, including stocks, private business stakes and venture capital holdings.
Zuckerberg owns about 13 per cent of Meta, which is headquartered in Menlo Park, California, and controls about 61 per cent of its votes through super-voting shares. He told the board that if he had to sell existing Meta shares to pay the tax, his voting power would fall to 53 per cent. As part of the agreement he has pledged to remain living in California for the next eight years.
Meta said a special committee held “robust negotiations” with Zuckerberg that “were protracted and, at several points, contentious”.
The committee concluded that his “continued leadership role, and his continuing presence at our headquarters in California, is critical at this current inflection point for the company and the tech industry in order to continue to provide value maximisation for all shareholders, and that those benefits substantially outweigh any countervailing considerations”.
Brad Erickson, internet equity analyst at RBC Capital Markets, said: “I think the bottom line here is, if you have been an investor in Meta for almost any near, medium or longer-term period of time, you’ve made a lot of money, and I think a lot of people would attribute a lot of that value to Mark Zuckerberg … I think this is the board saying, hey he’s our guy, we’re gonna stick with this.”
A September poll by the Public Policy Institute of California found 52 per cent of likely voters would back the tax and 46 per cent would vote against it.
Supporters say the tax is needed to make up for federal cuts to health services for lower-income people signed by President Trump last year. Technology executives and venture capitalists oppose it, arguing it will drive wealthy residents and their tax contributions out of the state. Gavin Newsom, the Democratic governor of California, has also said he opposes the tax.
In Britain, more than 100 millionaires urged Andy Burnham to tax their wealth in July, with Patriotic Millionaires UK calling for a 2 per cent tax on wealth over £10m.
