What's Going On With Snap Stock?

Snap, Inc. SNAP shares are trading lower Thursday after the company announced the pricing of a private offering of $650 million of convertible senior notes due 2030.

The Details:

Snap announced that it intends to offer a $650 million aggregate principal amount of convertible senior notes due 2030 in a private placement to qualified institutional buyers. Snap also intends to grant the initial purchasers of the notes an option to purchase up to an additional $100 million aggregate principal amount of notes.

The notes will have an initial conversion rate of 45.0846 shares of Snap Class A common stock per $1,000 principal amount of notes, equivalent to an initial conversion price of approximately $22.18 per share. The initial conversion price represents a premium of approximately 32.5% to the $16.74 per share closing price of Snap stock on May 8. 

Snap estimates that the net proceeds from the offering will be approximately $641.6 million, or approximately $740.4 million if the initial purchasers exercise their option to purchase additional notes in full. 

Snap said it intends to use approximately $159.4 million of the net proceeds to repurchase approximately $147.9 million aggregate principal amount of its outstanding convertible senior notes due 2025, approximately $259.5 million to repurchase approximately $237.5 million aggregate principal amount of its outstanding convertible senior notes due 2026, and the remaining net proceeds from the offering for general corporate purposes.

Related News: What's Going On With Affirm Stock After Earnings? 

Should I Sell My SNAP Stock?

When deciding to hold on to or sell a stock, investors should consider their time horizon, unrealized gains and total return.

Shares of Snap have increased by 87.89% in the past year. An investor who bought shares of Snap at the beginning of the year would make a profit of $0.3 per share if they sold it today. The stock has risen 51.1% over the past month, meaning an investor who bought shares on April 1 would see a capital gain of $5.36.

Investors may also consider market dynamics. The Relative Strength Index can be used to indicate whether a stock is overbought or oversold. Snap stock currently has an RSI of 85.06, indicating overbought conditions.

For access to advanced charting and analysis tools and stock data, check out Benzinga PRO. Try it for free.

SNAP Price Action: According to Benzinga Pro, Snap shares are down 1.73% at $16.45 at the time of publication Thursday.

Image: Shutterstock