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Snap to raise $1 billion to invest in AR, possible acquisitions

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Snap to raise $1 billion to invest in AR, possible acquisitions
Pedestrians walk past the front of the New York Stock Exchange (NYSE) with a Snap Inc. logo hung on the front of it shortly before the company's IPO in New York, U.S., March 2, 2017. REUTERS/Lucas Jackson   -   Copyright  Lucas Jackson(Reuters)
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By Sheila Dang

(Reuters) – Snap Inc <SNAP.N> on Tuesday said it will raise $1 billion (£821.15 million) in short-term debt and plans to invest in more media content, augmented reality features and may also buy other companies.

The parent company of the popular disappearing messaging app Snapchat has revived its user growth and stock price after a rough 2018. It introduced mobile gaming within Snapchat and developed its AR features such as lenses that overlay bunny ears on a user’s photo, but faces competition from larger platforms like Facebook Inc <FB.O> and newer social media apps like TikTok.

“We will continue to focus on developing our content, gaming, and augmented reality platforms to enhance the Snapchat experience for our community,” Snap Chief Executive Evan Spiegel said in a memo to employees seen by Reuters.

Snap will offer $1 billion in convertible senior notes that will mature in 2026, at which point it will choose to pay investors in cash, stock or a combination of both.

Spiegel said the current low-interest rate environment gives Snap a good opportunity to complete the offering. He noted investor demand for convertible notes is strong, adding that the company expects the fundraising to close later this week.

Shares of Snap were down less than 1% at $16.36 in morning trading.

(Reporting by Sheila Dang; Editing by Dan Grebler)

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