Facebook-parent Meta made its bond market debut on Tuesday. The company managed to raise $10 billion in its first-ever bond offering. The technology major, which owns Facebook, WhatsApp, and Instagram, among other products and services, plans to utilize extended capital to rebuild its business and fund share buybacks. The earnings from the bond sale will be also used to fund some costly initiatives, such as its metaverse virtual reality.
Meta’s first bond offering
With the maiden bond offering, the California-based technology alliance joined the league of other tech giants such as Apple Inc and Intel Corp, which recently raised funds through the debt market. Earlier this month, iPhone maker Apple Inc raised $5.5 billion in a four-part bond deal to invest in part stock buybacks and dividends. Intel Corp also dabbed in the U.S. bond market to raise $6 billion to fund its projects.
The fundraising comes at a time when the company’s balance sheet is under stress, recording its first-ever quarterly fall in revenue in the June quarter of 2022. The tech major also gave subdued earnings guidance for the current fiscal in the backdrop of the slowing U.S. economy and competitive pressures, which had an impact on its digital ads sales.
On Tuesday, Meta shares closed 1% dropping at $168.53, in line with the benchmark Nasdaq Composite, which sank 1.2% lower. Meta shares have lost nearly half their value since the beginning of the year as investors considered the company’s performance, especially its online advertising business.
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In Q2, Meta’s total number of ad impressions served across services grew 15%, while the average price per ad slipped 14% due to a decline in advertiser demand in response to the risen economic tension as well as foreign currency headwinds.
Adding to the woes, the advertising revenue growth is additionally predicted to remain slow as businesses are cutting their advertisement expenditure in the backdrop of recession fear.
For the April-June quarter of the current fiscal (Q2 FY22), Meta Platforms reported a 1% decline in its earnings to $28.8 billion from $29 billion in the same quarter last year, recording its first revenue drop since its listing. Further, the company also gave a weak forecast for the third quarter, mentioning a continuation of the ineffective advertising demand environment they experienced throughout the second quarter, which the company believes is being driven by broader macroeconomic uncertainty.
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