Snap Inc. said it will raise $1 billion in a private debt offering as the Snapchat parent company is looking to continuing building on its 2019 turnaround.
The convertible senior notes will have a due date of Aug. 2026, according to Snap. The proceeds will be used to cover general operating costs, Snap said, but may also be used to “acquire complementary businesses, products, services or technologies.” Snap said it could also be used for stock repurchases, although it has no immediate plans to do so.
Snap shares dropped 0.3% in early trading on Tuesday, hitting $16.40 per share.
The move comes a few weeks after Snap reported it added 13 million new daily active users during Q2, representing its best quarterly user growth in years, and ran past Wall Street’s revenue projections. It was the first quarter since Snap had unveiled a new slate of original shows, as well as a new in-app gaming platform. Snap’s rebound was also spurred by the launch of its viral gender face-swap filter in May and a revamped Android app.
Since the start of the year, Snap’s stock price has nearly tripled. Less than a year ago, Snap was trading at less than $5 per share, after a botched app redesign drove users away. Instagram copying some of its core features like Stories also didn’t help Snap’s growth.
Last year, Snap chief Evan Spiegel set a company goal of reaching full-year profitability for the first time ever in 2019, but that still appears to be a year off. The company reported a loss of more than $250 million last quarter — less than Snap lost during the same time last year — and a loss of about $310 million during Q1.