Meta has announced its first bond offering to ramp up its investment campaign to launch the Metaverse. The company has not yet announced the amount it wants to raise from the bond issue.
Meta will use the funds for Capex, share repurchases, acquisitions or investments. The last use case is critical as Meta is heavily invested in the metaverse.
In the last quarter of 2021, Meta invested $10 billion in the Metaverse, significantly impacting its financial results. In May 2022, Mark Zuckerberg warned investors that the company would have to spend even more money to achieve its metaverse goals.
The initiative dealt a massive blow to Meta’s finances and will be the company’s first debt. In its latest quarterly results, the company fell short of analysts’ expectations for revenue and earnings, causing the share price to plummet. Last week, Meta reported its first quarterly decline in revenue, signalling a slowdown in business growth.
The company’s cash reserves also declined markedly. Net income for the latest quarter was $4.45 billion. For the same quarter a year ago, net income was $8.51 billion, and for the first quarter of 2022, it was $8.53 billion.
The bond issue could help repair the damage the Metaverse initiative did to the company, but experts say the effect could be temporary, even though Meta sees it as a long-term project.
Also, Meta’s plans to acquire virtual reality company Within face an antitrust lawsuit from the US Federal Trade Commission over fears that the tech giant could carve out a monopoly in a new emerging sector, the metaverse.
