Snap says it's raising $1 billion in convertible debt

Key Points
  • Snap announces it's planning to raise $1 billion in debt.
  • The company, which is the maker of Snapchat, says it wants to use the proceeds to fund capital expenditures, operating expenses, stock repurchases, acquisitions and more.
Snap co-founder and CEO Evan Spiegel speaking at the 2018 Code Conference on May 29th, 2018.
Asa Mathat | Vox Media

Snap said Tuesday it's going to raise $1 billion in debt.

The company, which is the maker of Snapchat, said it is offering $1 billion in convertible senior notes, due on Aug. 1, 2026.

Snap said it will use the proceeds to cover operating expenses associated with running the business. It said the proceeds could also be used to "acquire complementary businesses, products, services, or technologies or for repurchases of Snap's common stock."

The stock finished down nearly 1% on Tuesday, a positive day for most tech stocks.

In a memo sent to employees last October, CEO Evan Spiegel detailed the company's goals to achieve profitability this year. Spiegel said it was a "stretch goal" to break even in the fourth quarter of 2018 and become profitable in 2019. The website Cheddar first reported the contents of the memo.

Snap recently reported second-quarter results that soared past analysts' estimates. The company posted a narrower-than-expected loss for the quarter and reported its second consecutive quarter of user growth.

Why social stocks are winning with subscribers