Snap announces plans of $650 million private offering

Snap Inc (NYSE: SNAP) is down 3.0% at writing after announcing plans of a private offering of convertible debt. 

Snap Inc to offer convertible senior notes

The social media company will offer $650 million worth of convertible senior notes “due 2030”, as per its press release on Wednesday. 

Interest and conversion rates of the notes are yet to be determined. 

The news follows a 50% gain in Snap stock on the back of Q1 earnings that handily topped Street estimates. The New York listed firm issued encouraging guidance for its current financial quarter last month as well. 

Note that Robert C. Murphy – chief technology officer of the $28 billion company based out of Santa Monica, California sold 1.0 million shares of Snap for over $14 million following the post-earnings rally (find out more).

How will $SNAP use proceeds from private offering?

Snap Inc said it will use proceeds from the private offering it announced today for corporate purposes. 

It intends to use them to repurchase its outstanding convertible notes due next year and in 2026 as well, the press release added on Wednesday. 

These transactions may place upward pressure on trading price of Snap stock, causing it to trade at higher prices than would be the case in the absence of these purchases.

Note that $SNAP expects up to $45 million in adjusted EBITDA in its second financial quarter versus analysts at $15.5 million. Wall Street currently has a consensus “hold” rating on Snap stock.

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