In a filing with the United States Securities and Exchange Commission (SEC), the parent company of Facebook, Instagram, and WhatsApp, the tech behemoth Meta announced plans to issue new debt from its debt shelf.
On May 1st, Big Tech META said in a prospectus that it “may, from time to time, offer and sell debt securities in one or more series.”
The statement added that a new “prospectus supplement” would be issued whenever debt securities are sold to detail the “specific terms of the debt securities offered.”
Debt shelf offerings, also known as debt securities, allow the issuer (here, Meta) to register a new issue of securities without immediately selling all of the securities in that issue.
The petition also noted that the debt securities might be sold through “underwriters, brokers, dealers, or agents as designated from time to time, directly to one or more other purchasers, or through a combination of such methods.”
There was no mention of how much debt securities were being issued in the filing.
Through shelf offerings, investors may gain helpful information about a company’s capital-raising strategy. The issuance of new shares may negatively impact existing shares’ prices.
The community reacted on Twitter by trying to make sense of Meta’s new funding sources in light of the company’s previous investment in artificial intelligence research and stock buybacks.
$META PLATFORMS INC FILES FOR DEBT SHELF; SIZE NOT DISCLOSED – SEC FILING
— *Walter Bloomberg (@DeItaone) May 1, 2023
This filing follows Meta’s most recent earnings report, revealing that the company’s Metaverse division had lost over $4 billion. After losing $14 billion last year, Zuckerberg expects even more significant losses in 2023.
However, recent reports from sources close to Meta indicate that the company provides annual salaries of $500,000 to $1,000,000 to its Metaverse developers.
To finance share repurchases and corporate investments, Meta issued bonds for the first time in August 2022, raising $10 billion.
