Snap to offer $500 million in senior notes due 2034

SANTA MONICA - Snap Inc. (NYSE:SNAP) announced Thursday its intention to offer $500 million in senior notes due 2034 through a private placement exempt from Securities Act registration requirements. According to InvestingPro data, the company currently operates with a moderate debt level and maintains strong liquidity, with a healthy current ratio of 3.88x.

The notes will be general and unsecured senior obligations of the company and may be guaranteed by Snap’s domestic subsidiaries that guarantee certain other indebtedness, according to a press release statement. The company’s total debt stands at $4.19 billion, representing about 24% of its total capital structure.

Snap plans to use the proceeds to repurchase portions of its outstanding convertible senior notes due in 2026, 2027, 2028, and/or 2030. Any remaining funds will be allocated for general corporate purposes, including working capital, operating expenses, capital expenditures, and potential acquisitions. For deeper insights into Snap’s financial health and debt management strategy, InvestingPro subscribers can access comprehensive analysis and 10 additional key insights about the company.

The company noted that holders of the repurchased convertible notes may subsequently purchase Snap Class A common stock in open market transactions or adjust derivatives positions to unwind hedge positions. These transactions could potentially influence the trading price of Snap’s Class A common stock.

The offering will be made only to qualified institutional buyers under Rule 144A of the Securities Act and to non-U.S. persons outside the United States under Regulation S. The notes have not been registered under the Securities Act or any state securities laws.

Snap Inc., which describes itself as a technology company focused on camera technology, did not specify the exact timing of the offering, noting it remains subject to market conditions and other factors.

In other recent news, Snap Inc. reported its second-quarter revenue in line with expectations, although its EBITDA fell $6 million short of prior estimates. The social media company experienced a slowdown in advertising revenue growth, which decelerated to 4% year-over-year, partially due to temporary ad platform issues and Ramadan comparisons. Guggenheim noted that Snap’s advertising revenue growth decreased to 3.8% from 9.3% in the first quarter, with Direct Response advertising showing a significant slowdown. RBC Capital lowered its price target for Snap to $10 from $12, citing a challenging second quarter related to ad platform development and expansion efforts.

Rosenblatt Securities also reduced its price target to $8.70 following an "odd mishap" in Snap’s ad auction system, which resulted in unintended discount pricing. Stifel maintained its Hold rating with an $8 price target, acknowledging mixed results and several headwinds, including issues with a new auction dynamic. Cantor Fitzgerald reiterated a Neutral rating with a $7 price target, pointing to the ad revenue slowdown as a key concern. Despite these challenges, Snap’s small and medium-sized business segment drove much of its advertising growth, while brand advertising trends showed modest improvement.

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