Tech giant Meta, formerly known as Facebook, has submitted a filing to the United States Securities and Exchange Commission (SEC) for new debt shelf offerings. This move comes shortly after the company’s latest earnings report revealed a nearly $4 billion loss from its metaverse unit. This loss follows a deficit of $14 billion over the last year, with CEO Mark Zuckerberg anticipating more in 2023.
The prospectus, filed on May 1, states that the Company “may, from time to time, offer and sell debt securities in one or more series.” Debt shelf offerings, or debt securities, allow the issuer to register a new issue of securities without the need to sell the entire issue at once. The filing did not disclose the exact amount of debt securities being offered.
The debt securities may be offered and sold to or via “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.“ This provision allows the Company to raise capital from various sources as needed.
On Twitter, the community responded by trying to connect the dots to the Company’s recent spending on AI development and buybacks as a potential reason for the new alternative funding sources. This filing also comes shortly after the Company released its latest earnings report, revealing a nearly $4 billion loss from its Metaverse unit.
Nevertheless, sources close to the Company recently shared that the company offers its Metaverse developers salaries of anywhere from $500,000 to $1 million a year. This demonstrates the company’s commitment to investing in the future of virtual reality and the metaverse.
In August 2022, Meta raised $10 billion in its first-ever bond offering to fund share buybacks and business investments. This move bolsters the company’s stock price, which had been lagging due to concerns over privacy issues and regulatory scrutiny.
Debt shelf offerings could be used for developing the metaverse
The latest debt shelf offerings could be used for various purposes, including funding further metaverse development, expanding the company’s AI capabilities, or acquiring new companies. The exact use of the funds remains to be seen, but investors will likely be watching closely to see how Meta plans to invest in its future growth.
While the new debt securities have the potential to be helpful to investors by occasionally giving insights into a company’s game plan for raising capital, they could also potentially negatively impact the price of current shares. As such, it will be important for investors to carefully monitor the company’s financial performance and strategic moves in the coming months.
