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Snap Sells Convertible Debt During the Recent Stock Surge

May 8, 2024
minute read

Snap Inc. shares experienced a decline on Wednesday subsequent to the revelation from the company, the parent entity of the widely-used video messaging platform Snapchat, about its intention to capitalize on the recent surge in its stock value by initiating the sale of convertible debt.

Snap Inc., known by its stock ticker SNAP, disclosed its proposal for a private offering totaling $650 million in convertible senior notes, set to mature by 2030. These notes will possess the capability to convert into cash, shares of Snap's common stock, or a hybrid combination of both. The precise interest rate and conversion ratio of the debt instrument remain undetermined.

During morning trading, the stock observed a decline of 2.2%, retracting from the peak it reached on Tuesday, marking a three-month high.

This announcement of the proposed offering follows a remarkable 50.4% surge in the stock's value up to Tuesday, prompted by the release of the company's second-quarter financial results, which were made public after the market closed on April 25.

Snap Inc. articulated its intention to utilize the proceeds garnered from this offering primarily for the repurchase of existing convertible notes that are due in 2025 and 2026, alongside allocation towards general corporate endeavors.

As of March 31, Snap's outstanding convertible debt amounted to $3.32 billion in principal, inclusive of $184.1 million in notes due in 2025 and $487.3 million in notes due in 2026.

Over the span of the past twelve months, Snap's stock has witnessed a staggering 99% surge, significantly outperforming the broader market as indicated by the 25.2% gain observed in the S&P 500 index.

Valentyna Semerenko
Eric Ng
John Liu
Editorial Board
Bryan Curtis
Adan Harris
Managing Editor
Cathy Hills
Associate Editor

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