Meta creates new share class to shield Zuckerberg from potential California wealth tax

Highlights

Meta creates new non-voting Class C shares via two-for-one stock split to let Zuckerberg cover potential Proposition 40 tax without diluting control.
Meta's Q3 revenue increases 26% to $64.6 billion, beating the $63.3 billion forecast, but profit drops 37% to $13 billion after a $9.9 billion legal charge.
New Mexico court orders Meta to pay $25 billion for misleading public about Facebook user data handling, as company headcount falls 15% year-over-year to 66,775.

Share structure plan tied to Proposition 40

As first reported by The Guardian, Meta said the arrangement is designed to address the risk that Proposition 40, a proposed one-time 5% tax on about 250 California billionaires, could prompt Zuckerberg to move his primary residence out of the state. Under the agreement, Zuckerberg commits to remain a California resident, or a resident wherever Meta keeps its base, for eight years.

Meta is creating a new class of non-voting shares through a two-for-one stock split for existing shareholders. The structure would allow Zuckerberg, whose net worth Forbes estimates at $239 billion, to sell some of the new Class C shares if California adopts the tax, helping him meet any resulting liability without diluting his voting control of the company.

Recent polling has shown Proposition 40 remains below majority support. Technology billionaires including Google co-founder Sergey Brin, Palantir co-founder Peter Thiel and former Google Chief Executive Eric Schmidt have been spending heavily to oppose the measure, while U.S. Representative Rohit Khanna has framed it as a choice between supporting working people or oligarchs.

Tax debate unfolds as Meta reports mixed financial results

The move comes as Meta reports stronger revenue but weaker profit for the latest quarter. The company says revenue rises 26% to $64.6 billion, above expectations of $63.3 billion, while profit falls 37% to $13 billion after a $9.9 billion charge tied to its landmark lawsuit over child protection and social media addiction failings.

Meta is also dealing with separate legal and operational pressures. In New Mexico, a judge orders the company to pay $25 billion after a trial finds it misled the public about its handling of Facebook user data, and Meta says its headcount falls to 66,775 at the end of September, down 15% from a year earlier.

Our earlier analysis of the S&P 500 selloff highlighted how weakness in large-cap technology and semiconductor stocks, alongside higher borrowing costs, intensified volatility and pulled the index below key short-term moving averages. We also noted that mixed early earnings signals and persistent uncertainty over AI investment sustainability were weighing on sentiment, with traders closely watching nearby support and resistance levels for the next move.

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