Economy · August 7, 2022

Meta launches the sale of single bonds

SAN FRANCISCO, Calif .: Facebook owner Meta is finishing a run as one of the few major debt-free companies, launching its first bond sale as the company battles uncertainty and places big bets on its metaverse vision.

Concerns about the social media giant’s future and stiff competition from TikTok have caused its shares to plummet as the company spends billions on its plan for the next iteration of the internet.

Meta told the US Markets Watchdog Thursday that it has begun offering bonds to raise funds for uses such as “capital expenditures, repurchases of outstanding common stock, acquisitions or investments.”

The firm, which also owns Instagram and WhatsApp, declined to comment beyond its submission to the Securities and Exchange Commission.

His deposit does not indicate the amount of funds he wants to raise, nor the duration of the bonds, but Bloomberg News reported that Meta could sell $ 8 to $ 10 billion in debt.

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Last week, Meta recorded its first year-over-year decline in quarterly revenue and its net profit fell 36% to $ 6.7 billion.

The company, which relies almost exclusively on advertising revenue, has been hit by a decline in advertiser spending driven in part by economic uncertainty and the rise of TikTok.

“I would say the situation looks worse than it was a quarter ago,” chief executive Mark Zuckerberg told analysts after last week’s disappointing results.

Some analysts have argued that the company, which renamed itself last year, should have gone into debt a long time ago.

“Meta has no debt on its balance sheet unlike other big tech players and the company will aggressively develop its metaverse strategy and that requires a lot of capital,” said analyst Dan Ives.

“This is a smart move,” he added.

Facebook has renamed itself Meta to signal its pivot in the construction of its vision for an interactive world of virtual and augmented reality that it sees as the future.

But since February, its share price has been split by two, with more than $ 400 billion of market capitalization disappearing.

“We are focused on making the long-term investments that will position us to be stronger as we emerge from this recession,” Zuckerberg told analysts last week.