Meta’s Facebook Is Taking Debt Securities, At First

/ Photo by AFP / Josh Adelson

SAN FRANCISCO, United States (AFP) – Facebook owner Meta is ending a round of one of the few major companies without debt, launching its first bond sale as the company grapples with uncertainty and is betting hard on its opposite vision.

Concerns about the social media giant’s future and fierce competition from TikTok have sent its shares tumbling, while the company is spending billions on its plan for the internet’s next iteration.

Meta informed the US market watchdog Thursday that it has begun offering bonds to raise funds for uses such as “capital expenditures, buybacks of outstanding shares of its common stock, acquisitions, or investments.”

The company, which also owns Instagram and WhatsApp, declined to comment other than filing with the Securities and Exchange Commission.

Its deposit does not indicate how much money it wants to raise, nor the term of the bond, but Bloomberg News reported that Meta could sell $8-10 billion in debt.

Last week, Meta reported its first annual 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 did a quarter of a year ago,” CEO Mark Zuckerberg told analysts after last week’s disappointing results.

Some analysts said the company, which renamed itself last year, should have taken on debt long ago.

“Meta has no debt on its balance sheet unlike other major tech companies, and the company will aggressively build its opposite strategy that requires a lot of capital,” said analyst Dan Ives.

“This is a smart move,” he added.

Facebook has renamed Meta to refer to its hub for building its vision of an interactive and augmented virtual reality world that it sees as the future.

But since February, its share price has been split in two, with more than $400 billion missing from market capitalization.

“We are focused on making the long-term investments that will make us stronger out of this downturn,” Zuckerberg told analysts last week.

juj / jm / sw

© AFP

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