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Meta Announces First-Ever Bond Offering Amid Push to Invest in Virtual Reality Projects

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Facebook-parent Meta said on Thursday it would make its first-ever bond offering, at a time when the social media company is making massive investments to fund its virtual reality projects. Meta did not disclose the size of the offering but said it would use the proceeds for capital expenditures, share repurchases, acquisitions or investments.

The company received an ‘A1’ rating from Moody’s and an ‘AA- rating’ and a ‘stable’ outlook from S&P. Meta is selling four tranches of bonds with maturities ranging from five years to 40 years.

Among big technology companies, Meta is the only one that does not have any debt on its books. Tapping the market now would give it more financial room as it tries to fund some expensive overhauls, including a bet on augmented and virtual reality technology, investors who heard its presentation for the bond offering on Tuesday said.

It might also be a rare opportunity to do so relatively cheaply in the current market environment. Corporate bonds have rebounded in the past month after a rout earlier this year, as investors hoped the US Federal Reserve’s fight against inflation through rapid rate increases was starting to have some impact.

This week the US investment grade primary bond markets have rebounded, with companies raising more than $38 billion (roughly Rs. 3,01,000 crore), making it the eighth busiest week of the year, according to Informa Global Markets data.

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Other tech giants such as Apple and Intel also issued bonds earlier this week, raising $5.5 (roughly Rs. 43,600 crore) billion and $6 billion (roughly Rs. 47,500 crore), respectively.

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Bankers and investors said such issuance windows may be rare in coming months. One banker in charge of a bond syndicate desk at a US bank said credit spreads could widen later this year, increasing funding costs.

Meta’s bond issuance will come after the company issued a gloomy forecast and recorded its first-ever quarterly drop in revenue, with recession fears and competitive pressures weighing on its digital ads sales.

Its free-cash flow has been depleting as it charges ahead with its metaverse plans, which led the change in its name to Meta from Facebook last year.

In the second quarter ended June 30, Meta had $4.45 billion (roughly Rs. 35,200 crore) in free cash flow, compared with $8.51 billion a year ago (roughly Rs. 67,400 crore) and $8.53 billion (roughly Rs. 67,600 crore) in the prior quarter.

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Chief Financial Officer Dave Wehner said on a post-earnings conference call that company had a “substantial amount” in its buyback program and expects to continue with buybacks as part of its capital allocation strategy.

© Thomson Reuters 2022


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Facebook Bans Major US Anti-Vaccination Group Children’s Health Defense for Spreading Covid-19 Misinformation

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Facebook-owner Meta said Thursday it had kicked one of the most influential US anti-vaccination groups off the social media network for spreading Covid-19 misinformation. The Children’s Health Defense (CHD), which has been a critic of Covid vaccines, immediately accused Meta of stifling its free speech rights. “Facebook is acting here as a surrogate for the federal government’s crusade to silence all criticism of draconian government policies,” CHD founder Robert Kennedy Jr., nephew of late president John F. Kennedy, said in a press release.

Meta spokesperson Aaron Simpson told AFP that the group’s accounts at Facebook and Instagram were shuttered on Wednesday. The ban came after repeated violations of Meta’s misinformation rules.

CHD said its social media accounts were followed by hundreds of thousands of people, and claimed the action by Meta came as a surprise.

In a release, the group shared a screen capture showing messages stating the accounts were suspended for violating Meta policies regarding “misinformation that could lead to real world harm.”

CHD contended that the ban could be related to a lawsuit it filed against Meta accusing the tech giant of infringing free speech rights by relying on US Centers for Disease Control regarding what Covid-19 information is scientifically backed.

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The anti-vaccine group has appealed a lower court ruling against it in the litigation, according to legal filings.

In other news, US teens have left Facebook in droves over the past seven years, preferring to spend time at video-sharing venues YouTube and TikTok, according to a Pew Research Center survey data out Wednesday. TikTok has “emerged as a top social media platform for US teens” while Google-run

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YouTube “stands out as the most common platform used by teens,” the report’s authors wrote.Pew’s data comes as Facebook-owner Meta is in a battle with TikTok for social media primacy, trying to keep the maximum number of users as part of its multi-billion-dollar ad-driven business.

The report said some 95 percent of the teens surveyed said they use YouTube, compared with 67 percent saying they are TikTok users.Just 32 percent of teens surveyed said they log on to Facebook — a big drop from the 71 percent who reported being users during a similar survey some seven years ago


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Elon Musk Said to Target Advertising Tech Firms in Twitter Suit Over Takeover Deal

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Billionaire entrepreneur Elon Musk, who is attempting to walk away from his deal to acquire Twitter, is seeking documents from advertising technology firms as part of his quest to gain more information on bot and spam accounts on Twitter, according to filings in a Delaware court on Thursday. Twitter has sued the Tesla chief executive, who has accused Twitter of hiding information about how it calculates the percentage of bots on the service, for attempting to walk away from the $44 billion (roughly Rs. 3,50,900 crore) agreement. A trial is scheduled for October 17.

Musk’s lawyers have subpoenaed both Integral Ad Science (IAS) and DoubleVerify for any documents or communications on their involvement in reviewing accounts or participation in any audit of Twitter’s user base.

IAS and DoubleVerify, which are both based in New York, use technology to independently verify that digital ads are viewed by real people. Advertisers use the services to ensure the ads they pay for are seen by potential customers and not automated bots.

Twitter, IAS and DoubleVerify did not immediately respond to requests for comment.

In response to a tweet by a user who questioned how Twitter audits its service and also linked to a Reuters story on Musk targeting the ad firms, Musk tweeted: “Those are the questions that Twitter is doing everything possible to avoid answering …”

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In a countersuit earlier this month, Musk claimed that Twitter’s monetizable daily active users are 65 million lower than what the company has touted. Twitter has said it stands by its disclosures.

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The metric measures users who log onto Twitter through the website or apps that are able to serve ads or used paid products like subscriptions, according to Twitter filings.

© Thomson Reuters 2022


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Snap Said to Shut Down Development of Pixy Flying Selfie Drone Camera: Report

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Snapchat parent Snap will stop future development of its Pixy flying selfie drone, the Wall Street Journal reported on Thursday, citing people familiar with the matter. Pixy, which costs $230 (roughly Rs. 18.300), will continue to be sold in its current iteration, according to the report.

The news comes nearly four months after the Santa Monica, California-based company launched the pocket-sized Pixy camera, which can fly a few feet above its user to take photos and videos.

Snap declined to comment on the report.

Rising costs and other economic woes have forced companies to curb their marketing spend, hurting ad-reliant online companies such as Snap, Facebook-parent Meta, Twitter, and Pinterest.

Last month, Snap had warned of “incredibly challenging conditions” due to the current economic turmoil and increasing competition after reporting disappointing results.

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The company, which is reeling from privacy changes made to Apple’s iPhone, had also said it would significantly slow hiring, invest in its advertising business and find new sources of revenue as part of its belt-tightening efforts.

On Monday, Snap said it had reached 1 million subscribers for its Snapchat premium subscription, after launching the service in June as a new source of revenue.

Social media companies including SnapTwitter, and Meta Platforms, which all earn the majority of revenue from selling digital advertising, are facing a weakening ad market due to record-high inflation causing brands to reign in their marketing spending.

Snap’s shares dropped 25 percent last month after disappointing second quarter earnings, as it suffered from weaker advertising demand than Wall Street had expected. Chief Executive Evan Spiegel said the company would work to speed up revenue growth, in part through new sources of revenue.

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© Thomson Reuters 2022

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