Meta Platforms explores its first potential bond sale: what investors need to know

Meta Platforms Inc META asked several banks to hold investor meetings for what would be the company’s first-ever bond sale. Shares of Facebook’s parent company appear to be reacting well to the news.

What there is to know: Meta shares are trading higher on Wednesday morning. The strength appears to be tied to reports suggesting the company will host an investor meeting for a possible 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 calls with investors on Wednesday. The report suggests a senior unsecured debt offering could follow the meetings.

Although several large-cap companies have borrowed when rates were low, Meta has not explored borrowing opportunities so far. According to data compiled by Bloomberg, there are only 18 S&P 500 companies that have no outstanding short or long-term debt, excluding lease debt – and Meta is one of them.

“Meta could build a new capital structure that includes its very first bonds, issuing well over $10 billion to the potential benefit of equity and debt holders, after weak first-half results and a drop of more than 50 % of its value in shares”, Bloomberg intelligence analyst Robert Schiffman said.

why is it important: Meta released 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 devoting more energy and focus to our top business priorities that unlock 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 expected third-quarter revenue to be impacted by “a continuing weak advertising demand environment.” The Bloomberg report suggested that Meta had the capacity to issue up to $50 billion in debt.

“Increased metaverse-focused capital spending, along with increased share buybacks, could theoretically be supported by tens of billions of low-cost debt in the form of free cash flow contracts in 2022” , Bloomberg’s Schiffman said.

See also: Here’s how much you’d have earned owning meta-platform stocks over the past 10 years

META Price Action: Meta has a 52-week high of $384.33 and a 52-week low of $154.25.

The stock was up 5.47% at $168.95 at press time, according to Benzinga Pro.

Photo: Courtesy of Meta