One of the first businesses to make the metaverse a core component of its business strategy, Meta is preparing to issue debt to fund a portion of its ongoing operations and keep a robust free cash flow.
The corporation will issue $10 billion in bonds as portions of the first debt offering of this kind for the computer giant, according to reports from sources close to the deal.
Investors have offered $30 billion to profit from the operation, which was scheduled to take place on Thursday.
The bonds will have durations ranging from five years to forty years, with the latter receiving the majority of the demand.
The offering has reportedly been in development for the past two months, and Meta decided to announce it after issuing its most recent earnings report in July.
With an “A1” rating from Moody’s and an “AA-” rating and a “stable” outlook from S&P, the corporation received satisfactory ratings from several agencies.
The company’s declining free cash flow over the previous year is what prompted the issuing of this bond.
In contrast to the $8.51 billion the business had a year prior, Meta had $4.45 billion in free cash flow.
According to sources, the goal of the bond sale will be to provide the business more breathing room to continue supporting some of its operations, including its metaverse projects.
The corporation is spending a lot of money on research and development because of Meta’s metaverse push.
During Q2 2022, the company’s metaverse division, Reality Labs, recorded sales of more than $400 million but losses of more than $2.8 billion, according to its most recent earnings call.
The business acknowledged that Reality Labs would continue to lose money in Q3, thus predictions are also not positive.
To “continue investing in bringing the VR industry ahead for the long run,” The company has also taken some action on the sales front by increasing the cost of its flagship VR headset, the Quest 2.
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