Meta Platforms Inc META asked several banks to host investor meetings for what would be the company’s first-ever bond sale. Shares of Facebook’s parent company appear to be responding well to the news.
What to know: Meta-shares are trading higher Wednesday morning. Strength appears to be linked to reports suggesting the company will hold an investor meeting for a potential bond sale.
According to a Bloomberg report, citing a person familiar with the matter, Meta asked: Morgan Stanley MRS, JPMorgan Chase & Co JPM, Bank of America Corp BAC and Barclays PLC BCS to schedule a series of fixed-income talks with investors on Wednesday. The report suggests a senior unsecured debt issue could follow the meetings.
Although several large-cap companies borrowed while interest rates were low, Meta has not explored lending opportunities to date. According to data collected by Bloomberg, there are only 18 companies in the S&P 500 that have no outstanding short-term or long-term debt, excluding lease obligations — and Meta is one of them.
“Meta could build a new capital structure that includes its first-ever bonds, issuing more than $10 billion to potential holders of both stock and debt, after weak first-half results and more than 50% decline in equity value” , Bloomberg intelligence analyst Robert Schiffman said.
Why it matters: Meta announced its second quarter financial results last week. The company said it ended the quarter with cash, cash equivalents and marketable securities of $40.49 billion, according to data from Benzinga Pro.
“We are putting more energy and focus on our top business priorities that unlock both short and long-term opportunities for Meta and the people and businesses that use our services,” said Mark Zuckerbergfounder and CEO of Meta.
The company said it expects third-quarter sales to be impacted by “a continuation of weak advertising demand.” The Bloomberg report suggested that Meta had the capacity to spend as much as $50 billion in debt.
“Increased capital spending directed at the metaverse, along with rising share buybacks, could theoretically be supported by tens of billions of cheap debt as 2022 free cash flow contracts,” Bloomberg’s Schiffman said.
See also: This is how much you would have earned in the past 10 years owning Meta Platforms stock
META Price Promotion: Meta has a 52-week high of $384.33 and a 52-week low of $154.25.
The stock rose 5.47% to $168.95 at press time, according to Benzinga Pro.
Photo: Courtesy of Meta