Meta's new nonvoting shares create an overhang — and Wall Street wants it gone

Meta ( META ) has created a new overhang on its stock that Wall Street wasn't expecting when it established a new class of stock.

The Street's advice to Mark Zuckerberg and his team: Issue the stock fast so the focus can return to the clear product momentum the company is enjoying with its new Muse AI agent .

"The sooner the better in our view as it would remove the overhang and the Street now knows it will have non-voting shares in Jan'27, and Meta can still do a substantial equity raise before then without even coming close to impacting Mark's voting control," JPMorgan analyst Doug Anmuth said.

Meta announced late Wednesday that it is establishing a new class of nonvoting Class C common stock, which effectively serves as a 2-for-1 stock split.

Under the scheme — in part designed to keep founder Mark Zuckerberg working in California as the 5% billionaire's tax looms — existing shareholders will receive one new nonvoting Class C share for every Class A or Class B share they hold. Trading is slated to begin in January 2027.

Issuing nonvoting stock allows Zuckerberg to raise external capital for Meta's AI build-out without diluting his personal voting control over the tech giant.

The news took some air out of the balloon on what was an impressive quarter for Meta amid signs that its AI investments are paying off.

Meta's core advertising business reported a 26% increase in total revenue to $64.6 billion, powered by AI-driven recommendations, higher ad volume, and rising ad prices.

GAAP earnings per share came in at $3.83 versus analyst estimates of $3.56.

Meta stock fell 2% in premarket trading on Thursday.

"Net/net, some near-term noise in Meta shares, but we're encouraged by core Advertising and Meta's outlook for strong overall revenue growth in 2027, and the path to superintelligence is increasingly clear w/the Muse series of models & products," Anmuth said.

Brian Sozzi is Yahoo Finance's Executive Editor, host of the Sozzi Unleashed morning show and the Power Players with Brian Sozzi podcast, and a member of Yahoo Finance's editorial leadership team.