Meta Platforms slides through the week after plan to sell new stock for AI

What did Meta announce?

Meta Platforms (Nasdaq: META) said on Monday that it plans to raise money by selling new stock. The company said the money would fund the build-out of its artificial intelligence infrastructure.

Why it matters: The package has several parts. Meta plans to sell new common stock, the ordinary shares most investors own. It also plans to sell mandatory convertible preferred shares. A later at-the-market program could follow, potentially starting from the first quarter of 2027.

How far did Meta's shares fall?

The shares slid 1.9% on Monday, the day of the announcement. They fell 1.6% on Tuesday and another 1.2% on Wednesday.

A Thursday gain of 2.0% broke the losing run, but it did not last. The stock slid 1.5% on Friday and closed at $614.99.

Over the week, Meta fell 4.3% and lost $61 billion in market value. The shares now trade 20.9% below their 52-week high of $777.59.

Why can selling new shares weigh on a stock?

Selling new shares can dilute existing owners. Dilution means the company is split into more pieces, so each share stands for a smaller slice. Future profits are also spread across more shares.

Mandatory convertible preferred shares are a hybrid security. Buyers receive preferred shares now, and those shares are designed to turn into common stock later. That conversion could add to the share count down the road.

An at-the-market program works differently from a big stock sale. The company sells shares into the market gradually, at prevailing prices, rather than in a large block. Under Meta's plan, those sales could begin from the first quarter of 2027.

The full size of the dilution is not yet clear. Gradual sales spread over time leave the final share count open, and that uncertainty may weigh on how investors value the stock.

How did chipmaker stocks move this week?

Chip stocks moved the other way at the start of the week. On Monday, Nvidia (Nasdaq: NVDA) jumped 2.4%, Advanced Micro Devices (Nasdaq: AMD) jumped 2.8% and Broadcom (Nasdaq: AVGO) jumped 2.3%.

Some investors may have read Meta's plan as a sign of continued spending on AI hardware. Money raised for AI infrastructure could flow partly to suppliers such as these companies.

Those gains faded by Friday. Nvidia tumbled 4.2% that day and 3.0% for the week. AMD tumbled 10.9% on Friday and slid 2.3% for the week.

Broadcom dropped 5.5% on Friday but still gained 1.4% over the week. The selling on Friday was broad across technology shares.

How did the wider stock market do this week?

The S&P 500, the index of large U.S. companies that many 401(k) funds track, fell 0.6% over the week. It rose 0.7% on Monday and slid 1.8% on Friday. The tech-heavy Nasdaq-100 slid 2.0% for the week.

Even after the weekly decline, the S&P 500 has still gained 10.7% since the start of the year.

Index funds weight companies by market value, and Meta and Nvidia are among the largest. Meta is worth $1.4 trillion and Nvidia $4.9 trillion. On Monday, Meta's decline and the chip gains may have partly offset each other inside those funds. By Friday, they were falling together.

What could happen next?

What’s next: AMD is scheduled to report quarterly results on Nov. 3. Those results could offer a fresh read on demand for AI chips.

The October jobs report is due Nov. 6 at 8:30 a.m. ET. The October consumer price index, the monthly report on inflation, follows on Nov. 10 at 8:30 a.m. ET. These reports could shape expectations for interest rates, which reach nearly every company in a broad fund.

For Meta, the at-the-market sales could begin from the first quarter of 2027, according to the plan.