Meta Offering Breaks Record With $125 Billion Orders For $25 Billion Bond Sale: Report

• At $25 billion, the bond sale is set to be the second-largest public corporate debt issuance this year, Bloomberg noted.
• Meta’s stock fell on Thursday after company projected an increase in capital expenditure for AI development over the next year.
• The funds from the bond sale are expected to support ongoing corporate projects, including AI infrastructure and development initiatives.

Meta Platforms (META) has reportedly received roughly $125 billion in orders for its $25 billion bond offering, marking the highest demand ever recorded for a single corporate debt sale. 

Bloomberg reported that the offering, intended for general corporate purposes, has surpassed previous records, including CVS Health Corp.’s (CVS) $40 billion bond sale in 2018, which drew $120 billion in investor orders. At $25 billion, the bond sale is set to be the second-largest public corporate debt issuance this year, the report noted. 

Meta’s stock dropped more than 10% in afternoon trade on Thursday and was the top trending ticker on Stocktwits. The stock declined to levels last seen in June of this year, despite the company reporting third-quarter (Q3) earnings that beat analyst expectations, due to its ambitious spending plans. Despite the dip in share price, retail sentiment around the tech giant on the platform improved to ‘extremely bullish’ from ‘bullish’ over the past day. Retail chatter, meanwhile, jumped to ‘extremely high’ from ‘normal’ levels.

AI Investment Drives Corporate Spending

The offering comes on the heels of CEO Mark Zuckerberg signaling that Meta would significantly ramp up spending on artificial intelligence during the company’s third-quarter earnings call. 

Meta reported earnings per share (EPS) of $7.95, at par with the estimated $7.94, according to Koyfin data. Its revenue came in at $51.24 billion, surpassing the forecast of $49.51 billion. However, it revised its capital expenditure to between $70 billion and $72 billion, higher than the previous forecast of $66 billion to $72 billion.

The funds from the bond sale are expected to support ongoing corporate projects, including AI infrastructure and development initiatives. The offering is expected to include notes with maturities ranging from five to 40 years. Initial price indications for the 40-year note are around 1.4 percentage points above U.S. Treasuries.

Analysts Strike A Note Of Caution

While UBS and Roth Capital raised their price targets on Meta’s stock, the rest of Wall Street took a more cautious approach. Benchmark downgraded Meta to ‘Hold’ from ‘Buy’, highlighting near-term uncertainty in returns from AI spending. Meanwhile, Bernstein lowered its price target to $870 from $900, while maintaining an ‘Outperform’ rating, noting strong AI-driven revenue growth but cautioning that rising capital expenditures could prompt costly recalls of past investments, such as the Metaverse. 

Read also: Bitcoin Dips, Triggers $800 Million In Crypto Liquidations After Powell’s December Warning

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