Bullish indicating open at $55-$60, IPO prices at $37
Snap Inc (NYSE:SNAP) announced Tuesday that it has issued $550 million in 6.875% Senior Notes due 2034 through a private offering to qualified institutional buyers. The company entered into a purchase agreement on August 7 with Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC, acting as representatives for the initial purchasers.
According to a statement based on a SEC filing, the notes are senior unsecured obligations and will pay interest semi-annually on March 15 and September 15, starting March 15, 2026. The notes mature on March 15, 2034, unless repurchased or redeemed earlier. Snap estimates net proceeds of approximately $541.3 million after deducting discounts, commissions, and expenses. InvestingPro analysis shows that Snap operates with a moderate level of debt, with total debt standing at $4.2 billion. For deeper insights into Snap’s financial health and detailed analysis, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
The proceeds from the offering, along with cash on hand, were used to repurchase portions of Snap’s outstanding convertible notes in privately negotiated transactions. On August 7, Snap repurchased about $157.4 million principal amount of its 0.75% Convertible Senior Notes due 2026, $246.3 million of its 0.00% Convertible Senior Notes due 2027, and $185.8 million of its 0.125% Convertible Senior Notes due 2028. The total cash paid for these repurchases was approximately $550.1 million, with settlement occurring on or about Tuesday.
The new notes may be redeemed at Snap’s option before September 15, 2028, at a price equal to 100% of the principal plus accrued interest and a make-whole premium. Up to 40% of the original amount may also be redeemed with proceeds from certain equity offerings at a redemption price of 106.875% plus accrued interest. After September 15, 2028, the notes may be redeemed at specified prices.
The indenture for the notes includes customary covenants and events of default, such as missed payments, bankruptcy, or failure to comply with certain obligations. In the event of a change of control, Snap will be required to offer to repurchase the notes at 101% of the principal plus accrued interest.
This information is based on a statement included in Snap’s recent SEC filing.
In other recent news, Snap Inc. faced a challenging second quarter, with revenue growth falling short of expectations despite strong user engagement. Profitability declined due to weaker monetization and technical disruptions on its advertising platform, impacting ad pricing and performance. Despite these setbacks, Freedom Broker upgraded Snap’s stock rating from Hold to Buy, albeit with a reduced price target of $9.00, suggesting a potential turnaround.
In financial maneuvers, Snap announced the pricing of $550 million in senior notes due in 2034, with an interest rate of 6.875%. This move follows their earlier intention to offer $500 million in senior notes through a private placement. Analyst firm RBC Capital lowered its price target for Snap to $10.00 from $12.00, maintaining a Sector Perform rating, citing difficulties with ad platform development. Meanwhile, Cantor Fitzgerald maintained a Neutral rating and a $7.00 price target, noting that Snap’s second-quarter revenue met expectations, though EBITDA was slightly below estimates. These developments highlight the ongoing challenges and strategic responses by Snap Inc.
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