Meta Platforms Inc. isn’t ruling out the bond market when it comes to adding to the company’s giant stockpile of cash, Chief Financial Officer Susan Li said in an interview with Bloomberg Television’s Caroline Hyde and Ed Ludlow on Thursday.
(Bloomberg) — Meta Platforms Inc. isn’t ruling out the bond market when it comes to adding to the company’s giant stockpile of cash, Chief Financial Officer Susan Li said in an interview with Bloomberg Television’s Caroline Hyde and Ed Ludlow on Thursday.
“We have been raising debt, we did earlier this year, just as we’re evolving our capital structure going forward, and that’s something that we’ll continue to do on a measured pace,” said Li. “We generate a lot of capital that we’re always looking to allocate across the organic opportunities that we have, and then of course, shareholder returns.”
Li’s comments come on the heels of the social media giant’s robust second-quarter earnings, with Meta’s revenue seen growing as much as 20% in the current quarter, the company said Wednesday. That optimistic outlook is a sharp reversal from about a year-and-a-half ago when the company missed revenue estimates and reported stagnant user growth, prompting Meta to slash jobs and cut costs.
Bondholders are likely to be “pretty receptive” to more debt issuance from the firm, Bloomberg Intelligence analyst Robert Schiffman said in an interview.
“The market is wide open for Meta to issue another $10 billion if they want to without significant new issue concessions,” said Schiffman, referring to sweeteners that companies sometimes offer to lure investors.
If Meta issues debt in the wake of earnings, that could also bolster the company’s balance sheet, which is already flush with $37 billion of cash, Schiffman wrote in a note last week. Debt issuance could stand to lift shareholder returns toward $10 billion a quarter, Schiffman wrote.
The Facebook parent tapped the US investment-grade bond market in May, raising $8.5 billion in fresh debt to help fund capital expenditures, repurchase outstanding shares of its common stock, and for acquisitions or investments. Meta raised $10 billion in its first ever corporate bond issue last year as its cash flow and stock price were falling.
According to Schiffman, although Meta’s stock price and cash flow levels suggest there isn’t much need for the company to borrow in the near term, “opportunistic borrowing can’t be ruled out as spending remains considerable.”
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