Conor Mac's avatar
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Meta Raise $10B in Debt for the 1st Time Ever
News that $META is selling $10B in notes for the first time ever. I suspect this will be for buybacks, M&A, and your typical CapEx.

Whilst Meta does have ample cash on hand, having ZERO debt for a company as large as Meta could be construed as inefficient. Plus, ten billion is hardly overzealous.
Thoughts?
48%Great - Buyback machine!
34%Meh - Not sure
16%Bad - Start of slippery slope
43 VotesPoll ended on: 08/05/22
Rihard Jarc's avatar
I think it's good but should have done it even sooner when rates were lower. It's similar to when they did the big buybacks in Q4 2021. Could have used that money now with the stock being down substantially, here the same thing could be said. Why didn't you raise debt sooner in a record low interest rate environment.
Conor Mac's avatar
@rihardjarc i remember Peloton raised $1B at 0% interest 😓 oh the days
Rihard Jarc's avatar
@investmenttalk haha I forgot about that one. Sick!
Tom's avatar
This is a good move - although executed too late in my opinion. I'm not a bond guy but I can't imagine issuers are all too excited about the margin compression. That said, I think the bazooka is warranted at this valuation.
Conor Mac's avatar
@theglobalcapitalist it’s time to get the zooooka out

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Conor's avatar
Look at how much cash $AAPL has and how much long-term debt Apple has. I think it worked out okay for them :)
Conor Mac's avatar
Christian's avatar
If you had to guess it’s buybacks or MA you think?
Modern Growth Investing's avatar
@christian7621 BB BB (buybacks baby)
Conor Mac's avatar
@christian7621 buybacks, they are rarely allowed to follow through on M&A
Brett Schafer's avatar
Feels like a smart move but why didn't they take advantage of lower interest rates? Same with Google?

I believe $EA got a 2032 bond at less than a 3% interest rate (fixed). Facebook and Google should have done $100 billion each imo
Conor Mac's avatar
@ccm_brett Yea seems to be most people's sentiment, about why they didn't take advantage earlier.
Dissecting the Markets's avatar
I think it would be better suited for buying out $SNAP $PINS or $TWTR
Karan Malhotra's avatar
A year ago with rates at basically 0, I would have agreed. I doubt they got that now
Conor Mac's avatar
@karan10489 I wonder what rate they pay for it, I have to assume it's going to be high-rated debt. I remember Peloton raised $1B at 0% and a 200% conversion premium to share price. lol
Karan Malhotra's avatar
@investmenttalk with appropriate lol to peloton, they’re still pretty big and should have a reasonable cost of capital, guess we’ll have to wait and see
StockOpine's avatar
Theoretically, having debt in the capital structure lowers the cost of capital and thus increases the value of Meta (future cashflows discounted at a lower rate).
We agree with the comment of @rihardjarc , but still it is a positive development.
Conor Mac's avatar
@stockopine Great point right there.

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