Facebook Meta takes on bond debt for the first time

/ AFP PHOTO / Josh Edelson

SAN FRANCISCO, USA (AFP) — Facebook owner Meta is winding down as one of the few big firms out of debt by launching its first bond sale as the company battles uncertainty and bets big on its vision of the metaverse.

Worries about the social media giant’s future and fierce competition from TikTok have seen its stock plummet as the firm spends billions on its plan for the internet’s next iteration.

On Thursday, Meta told the US market watchdog that it has begun offering bonds to raise money for purposes such as “capital spending, repurchases of outstanding common stock, acquisitions or investments.”

The firm, which also owns Instagram and WhatsApp, declined to comment other than filing with the Securities and Exchange Commission.

Its filing did not specify the amount of funds it wants to raise or the duration of the bonds, but Bloomberg news agency reported that Meta could sell $8-10 billion in debt.

Last week, Meta reported its first year-over-year drop in quarterly revenue, while its net income fell 36 percent to $6.7 billion.

The firm, which relies almost exclusively on ad revenue, has been hit by lower advertiser spending, fueled in part by economic uncertainty and the rise of TikTok.

“I’d say things seem worse than they were a quarter ago,” CEO Mark Zuckerberg told analysts after last week’s disappointing results.

Some analysts say the company, which rebranded last year, should have taken on debt long ago.

“Unlike other big tech players, Meta has no balance sheet debt and will aggressively grow its metaverse, which requires a lot of capital investment,” said analyst Dan Ives.

“This is a smart move,” he added.

Facebook has renamed itself Meta to signify its turn to building its vision of the interactive world of virtual and augmented reality that it sees in the future.

But since February, its share price has halved, and a market capitalization of more than $400 billion has disappeared.

“We are focused on long-term investments that will enable us to become stronger after this recession,” Zuckerberg told analysts last week.

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© Agence France-Presse