TLDR
- Meta (META) stock was down about 1% early Monday after the company announced a $35 billion stock offering.
- The deal includes $22.5 billion of Class A common stock and $12.5 billion in depositary shares tied to preferred stock.
- Nvidia, AMD and Broadcom have shown interest in buying up to $5 billion of the Class A stock.
- Meta also plans an at-the-market program of up to $60 billion in new Class C stock, possibly starting in Q1 2027.
- The stock is down nearly 9% over the past five sessions on spending worries.
Meta Platforms (META) stock was down 1.35% early Monday after the company launched a $35 billion stock offering. In premarket trading, the stock was off about 1.2%.
The stock has dropped nearly 9% over the past five trading sessions. Last weekās earnings report was solid, but worries about rising spending and falling free cash flow took over.
Meta plans to sell about $22.5 billion of Class A common stock. It also plans to sell about $12.5 billion in depositary shares that represent preferred stock.
Barronās had said a raise like this could come āas early as the next few weeks.ā Meta moved faster than that.
Three chip makers are in the mix. Nvidia (NVDA), Advanced Micro Devices (AMD) and Broadcom (AVGO) have said they may buy up to $5 billion of the Class A stock combined. On Monday, NVDA was up 2.16%, AMD was up 1.16% and AVGO was up 1.50%.
How the Offering Is Structured
Underwriters get extra room on both deals. Those who handle the depositary shares have a 30-day option to buy up to 37.5 million more. Underwriters of the common stock get the same 30 days to buy up to $3.4 billion more in Class A shares.
That means the full raise could end up larger than $35 billion. The extra stock covers over-allotments, if there are any.
Meta also announced a separate plan. It wants to run an at-the-market offering of up to $60 billion in a new class of stock, called Class C.
An at-the-market program works differently from a one-time sale. New stock is sold through an underwriting group to investors over time. Meta said this could begin in the first quarter of 2027.
Why Meta Is Raising Cash
Meta said it will use the money for general corporate purposes. It also named the growth of its artificial intelligence work as a key need.
The spending numbers are large. Meta expects capital expenditure this year to land between $135 billion and $145 billion.
Some investors seem to like the idea of using equity over debt. Borrowing costs have been climbing. Still, the market is nervous about the size of the spending plans.
Meta described its approach in a statement. āThe company intends to fund these investments through a balanced mix of operating cash flow, investment-grade debt, strategic partnerships, and equity capital,ā it said.
The company called the new offerings āa complementary source of capital.ā It said they will āfurther diversify Metaās funding sources.ā
So Meta is not dropping debt altogether. It is adding another tool to the box.
The latest details came Monday morning. META was trading down 1.35%, while the three chip makers that showed interest were all higher.
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