Facebook owner Meta is ending a run as one of the few major companies with no debt and launching its first bond sale as the company battles uncertainty and bets heavily on its Metaverse vision.
Worries about the future of the social media giant and fierce competition from TikTok have sent its shares plummeting as the company spends billions on its plan for the next iteration of the internet.
Meta reported to the US market regulator Thursday that it has begun offering bonds to raise money for purposes such as “investments, buybacks of outstanding shares of its common stock, acquisitions or investments.”
The company, which also owns Instagram and WhatsApp, declined to comment beyond its filing with the Securities and Exchange Commission.
Its filing does not specify the amount of funds it intends to raise or the term of the bonds, but Bloomberg news agency reported that Meta could sell $8 billion to $10 billion in debt.
Last week, Meta reported its first year-over-year decline in quarterly revenue, and net income fell 36 percent to $6.7 billion.
The company, which relies almost entirely on advertising revenue, has been hit by a decline in advertiser spending, due in part to economic uncertainty and the rise of TikTok.
“I would say that the situation appears to be worse than it was a quarter ago,” CEO Mark Zuckerberg told analysts after disappointing results last week.
Some analysts said the company, which rebranded last year, should have borrowed a long time ago.
“Meta, unlike other big tech companies, has no debt on its balance sheet, and the company will grow its Metaverse strategy aggressively, and that requires a lot of capital,” said analyst Dan Ives.
“It’s a smart move,” he added.
Facebook rebranded itself Meta to signal its pivot in building its vision of an interactive world of virtual and augmented reality that it sees as the future.
But since February, the stock price has been divided by two, with more than $400 billion in market cap disappearing.
“We are focused on making long-term investments that will position us to emerge stronger from this downturn,” Zuckerberg told analysts last week.
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