Snap Announces Pricing of Upsized Offering of $1.5 Billion of Senior Notes Due 2033

Rhea-AI Summary

Snap Inc. (NYSE: SNAP) has announced the pricing of $1.5 billion in senior notes due 2033 with a 6.875% interest rate, payable semiannually starting September 1, 2025. The notes received ratings of B1 (Moody's), BB (Fitch), and B+ (S&P).

The company expects to generate approximately $1,475.0 million in net proceeds, which will be primarily used to repurchase existing convertible senior notes: $45.3 million of 2026 notes, $797.4 million of 2027 notes, and $800.0 million of 2028 notes, for a total repurchase price of $1,445.1 million. The remaining funds will be used for general corporate purposes.

The transaction may lead to increased trading activity in Snap's Class A common stock, as note holders might purchase shares or adjust their hedge positions in response to the repurchase.

Positive

• Received positive rating outlook from Moody's
• Strategic debt restructuring through repurchase of existing convertible notes
• Potential upward pressure on stock price due to expected trading activity

Negative

• High interest rate of 6.875% on new notes
• Increased debt burden with $1.5 billion in new senior notes

Insights

Financial Analyst

This $1.5 billion senior notes offering represents a strategic debt restructuring that merits careful analysis. The 6.875% interest rate and 2033 maturity suggest Snap is prioritizing longer-term financial flexibility over immediate cost optimization. The company is effectively extending its debt maturity profile while consolidating multiple convertible note tranches into a single, more straightforward senior debt instrument.

The credit ratings (B1/BB/B+) reflect moderate credit risk but also indicate market confidence in Snap's ability to service this debt. The positive outlook from Moody's is particularly noteworthy, suggesting potential for rating improvements if operational execution remains strong. The $1.445 billion repurchase of existing convertible notes could reduce potential future dilution, though at the cost of higher fixed interest payments.

Several key implications emerge from this transaction:

• The shift from convertible to straight debt eliminates potential equity dilution but increases fixed payment obligations
• The consolidated maturity in 2033 improves near-term debt management but locks in current market rates for an extended period
• The expected unwinding of hedge positions by note holders could create temporary technical support for the stock

The $30 million remaining from the offering provides additional working capital, though this represents a relatively modest cushion given Snap's operational scale. The transaction's timing and structure suggest management's confidence in long-term cash flow generation capacity, as the company is taking on significant fixed payment obligations rather than maintaining the flexibility of convertible instruments.

SANTA MONICA, Calif.--(BUSINESS WIRE)-- Snap Inc. (NYSE: SNAP) announced today the pricing of $1.5 billion aggregate principal amount of 6.875% senior notes due 2033, or the notes, in a private offering that is exempt from the registration requirements of the Securities Act of 1933, as amended, or the Securities Act. The sale of the notes is expected to close on February 14, 2025, subject to customary closing conditions.

The notes will be senior unsecured obligations of Snap and will be fully and unconditionally guaranteed in the future, jointly and severally, by each of Snap’s domestic subsidiaries that guarantees certain of its other indebtedness, if any, subject to certain exceptions. The notes will bear interest at a rate of 6.875% per annum, payable semiannually in arrears on March 1 and September 1 of each year, beginning on September 1, 2025. The notes will mature on March 1, 2033 unless earlier repurchased or redeemed.

Moody’s Ratings has assigned a “B1” rating with a positive outlook to Snap and the offering of the notes. Fitch Ratings has assigned a “BB” rating with a stable outlook to Snap and the offering of the notes. Standard & Poor’s has assigned a “B+” rating with a stable outlook to Snap and the offering of the notes.

Snap estimates that the net proceeds from the offering will be approximately $1,475.0 million, after deducting the initial purchasers’ discounts and commissions and estimated expenses payable by Snap. Snap intends to use the net proceeds from the offering to repurchase an aggregate principal amount of (i) $45.3 million of its outstanding convertible senior notes due 2026, or the 2026 notes, (ii) $797.4 million of its outstanding convertible senior notes due 2027, or the 2027 notes, and (iii) $800.0 million of its outstanding convertible senior notes due 2028, or the 2028 notes, for an aggregate repurchase price of $1,445.1 million. Snap intends to use the remaining net proceeds from the offering for general corporate purposes, including working capital, operating expenses, capital expenditures, acquisitions of complementary businesses, or other repurchases of Snap’s securities.

In addition, Snap expects that some or all of the holders of the 2026 notes, the 2027 notes, or the 2028 notes that it repurchases may purchase shares of Snap Class A common stock in open market transactions or enter into or unwind various derivatives with respect to Snap Class A common stock to unwind hedge positions that they have with respect to their investment in the 2026 notes, the 2027 notes, or the 2028 notes. These transactions, in turn, may place upward pressure on the trading price of Snap Class A common stock, causing Snap Class A common stock to trade at higher prices than would be the case in the absence of these purchases.

The notes have not been and will not be registered under the Securities Act or any state securities laws. The notes will only be offered or sold to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A promulgated under the Securities Act, and outside the United States to non-U.S. persons pursuant to Regulation S under the Securities Act.

This press release is not an offer to sell and is not soliciting an offer to buy any securities, nor will it constitute an offer, solicitation, or sale of the securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or jurisdiction. Any offers of the notes will be made only by means of a private offering memorandum.

About Snap Inc.

Snap Inc. is a technology company. We believe the camera presents the greatest opportunity to improve the way people live and communicate. We contribute to human progress by empowering people to express themselves, live in the moment, learn about the world, and have fun together.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, about Snap and Snap’s industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this press release, including statements regarding the expected closing of the offering of the notes, the anticipated use of the net proceeds from the offering of the notes, the expected repurchases of the 2026 notes, the 2027 notes, and the 2028 notes, and effects thereof, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “going to,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these words or other similar terms or expressions. Snap cautions you that the foregoing may not include all of the forward-looking statements made in this press release.

You should not rely on forward-looking statements as predictions of future events. Snap has based the forward-looking statements contained in this press release primarily on its current expectations and projections about future events and trends, including its financial outlook, macroeconomic uncertainty, and geo-political conflicts, that it believes may continue to affect Snap’s business, financial condition, results of operations, and prospects. These forward-looking statements are subject to risks and uncertainties related to: Snap’s financial performance; the ability to attain and sustain profitability; the ability to generate and sustain positive cash flow; the ability to attract and retain users, partners, and advertisers; competition and new market entrants; managing Snap’s growth and future expenses; compliance with new laws, regulations, and executive actions; the ability to maintain, protect, and enhance Snap’s intellectual property; the ability to succeed in existing and new market segments; the ability to attract and retain qualified team members and key personnel; the ability to repay or refinance outstanding debt, or to access additional financing; future acquisitions, divestitures, or investments; and the potential adverse impact of climate change, natural disasters, health epidemics, macroeconomic conditions, and war or other armed conflict, as well as risks, uncertainties, and other factors described in “Risk Factors” in Snap’s Annual Report on Form 10-K for the year ended December 31, 2024 and Snap’s other filings with the SEC, which are available on the SEC’s website at www.sec.gov. In addition, any forward-looking statements contained in this press release are based on assumptions that Snap believes to be reasonable as of this date. Snap undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250211999569/en/

Investors and Analysts:

ir@snap.com

Press:

press@snap.com

Source: Snap Inc.

FAQ

What is the interest rate and maturity date for SNAP's new senior notes?

SNAP's new senior notes carry a 6.875% interest rate and will mature on March 1, 2033, with interest payable semiannually starting September 1, 2025.

How much existing debt will SNAP repurchase with the new notes proceeds?

SNAP will repurchase $1,445.1 million of existing convertible notes: $45.3 million due 2026, $797.4 million due 2027, and $800.0 million due 2028.

What credit ratings did SNAP receive for the new senior notes?

The notes received ratings of B1 from Moody's (positive outlook), BB from Fitch (stable outlook), and B+ from S&P (stable outlook).

How might SNAP's stock price be affected by this notes offering?

The stock price may experience upward pressure as note holders purchase shares or adjust hedge positions in response to the repurchase of existing convertible notes.

What is the net proceeds amount SNAP expects from the notes offering?

SNAP expects to receive approximately $1,475.0 million in net proceeds after deducting initial purchasers' discounts, commissions, and estimated expenses.