Should Investors Fret Over Snap’s $850 Million Debt Offering?
Snap's (NYSE: SNAP) stock surged nearly 40% on April 22 after the social media company posted strong first-quarter numbers. However, the stock dipped 6% the following day after the company announced a new debt offering.
Snap will offer $850 million in senior convertible notes, due in 2025 with an interest rate of 0.25%, in a private placement to qualified institutional buyers. Initial buyers will have an option to buy up to $150 million in additional notes; the notes can be converted to cash, Snap's Class A stock, or a combination of both upon maturity.
Snap plans to use the proceeds for "general corporate purposes," including working capital, operating expenses, and potential investments and acquisitions. The announcement wasn't surprising since Snap remains unprofitable and is burning through lots of cash, but the exclusion of those plans from its conference call might rub investors the wrong way.
Source Fool.com
