Meta Platforms Is Exploring Its First Potential Bond Sale: What Investors Need To Know

Meta Platforms Inc META has asked several banks to set up 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 related to reports suggesting the company will hold an investor meeting for a possible bond sale.

According to a Bloomberg report, citing a person familiar with the matter, Meta asked Morgan Stanley MS, JPMorgan Chase & Co JPM, Bank of America Corp BAC and Barclays PLC BCS to schedule a series of fixed-income calls with investors Wednesday. The report suggests that a senior unsecured debt offering could follow the meetings.

Although several large-cap companies borrowed while rates were low, Meta has not explored borrowing opportunities until now. According to data compiled by Bloomberg, there are only 18 companies in the S&P 500 that do not have outstanding short or long-term debt, excluding lease liabilities — and Meta is one of them.

"Meta could build a new capital structure that includes its first-ever bonds, issuing well over $10 billion to potentially benefit holders of both equity and debt, following weak first half results, and over a 50% drop in its equity value," Bloomberg intelligence analyst Robert Schiffman said.

Why It Matters: Meta reported 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're putting increased energy and focus around our key company priorities that unlock both near- and long-term opportunities for Meta and the people and businesses that use our services," said Mark Zuckerberg, founder and CEO of Meta.

The company said it expected third-quarter revenue to be impacted by "a continuation of the weak advertising demand environment." The Bloomberg report suggested Meta had the capacity to issue as much as $50 billion of debt. 

"Increased capital spending focused on the metaverse, along with rising share buybacks, could be supported with tens of billions of low-cost debt theoretically as 2022 free cash flow contracts," Bloomberg's Schiffman said. 

See Also: Here's How Much You Would Have Made Owning Meta Platforms Stock In The Last 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