No. of Recommendations: 1
cap raise? Ringing a bell? For me, when the wall street gangbangers find new innovative ways to package and sell inappropriate products to, retail, the bells are ringing, and it isn't Sunday. Sadly, the honorable Jamie Dimon has joined Musk on the, dog and pony roadshow, promoting SpaceX to retail. At least SPY rethought easing their inclusion requirements, Nasdaq hasn't. The past 2days long brkb short Nasdaq hasn't done too bad. I seriously doubt brkb will be buying these hot IPOS in the aftermarket at big premiums prior to HUGE lock ups arriving. This reminds me of financial geniuses finding new innovative ways to sell homes to first time buyers in 2007 with little down, and interest only adjustable-rate mortgages. WHAT COULD GO WRONG?
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Meta’s decision to consider a fresh share sale comes amid a frenzy of activity in US equity capital markets, with Elon Musk’s SpaceX set to hold its initial public offering next week and AI groups Anthropic and OpenAI also working on plans for massive Wall Street debuts.
Mega tech companies have also tapped debt markets - which as we said last year AI is also now a bubble - as they rush to finance AI infrastructure, including chips and data centers.
Meta CFO Susan Li is leading the talks over the potential share sale alongside Dina Powell McCormick, who moved from Meta’s board to take a more active role as president in January. Powell McCormick has been tasked with overhauling Meta’s approach to AI infrastructure and financing, with a focus on longer-term planning as it enters the most capital-intensive period in its history.
Meta must find new ways to fund the huge data centers needed to train and run advanced AI models to fulfil Zuckerberg’s vision for “personal superintelligence” delivered through Facebook, WhatsApp and Instagram, as well as a family of AI-powered wearables such as smart-glasses and voice pendants.
Meta has not yet hired banks and ultimately may not issue new stock. One person cautioned that it was “premature” to say that the company had decided what to do and all financing options remain on the table. A Meta spokesperson said the share sales talks were “pure speculation”, but added “we’ve been clear that huge opportunities lie ahead in AI, and we’ll continue focusing on raising capital in the most flexible ways to support that”.
A person familiar with Meta’s discussions said the group had looked at the structure of Alphabet’s capital raising, which included “mandatory convertible preferred issuance”. This allows it to raise cash immediately, but defers the stock issuance potentially for years.
According to the FT report, Goldman Sachs would be in a strong position to win the Meta mandate considering Powell McCormick spent 16 years at the investment bank. The Wall Street bank led the Google deal announced this week.
As noted above, Meta exces are conscious that they will have to move fast if they decide to raise equity to ensure capacity and investor enthusiasm remain amid a historic glut of activity in US public markets. SpaceX is set to raise as much as $86bn next week in an IPO that would value the group at $1.78tn. Claude maker Anthropic has confidentially filed for its own listing and rival OpenAI is also preparing to go public. Both are expected to raise tens of billions and attract $1tn-plus valuations.
Analysts say that Meta’s Big Tech rivals such as Microsoft and Amazon are also likely to be considering their own stock sales as their data centre spending surges and investors question the impact on their balance sheets.
Meta has already raised fresh capital through new means and innovative structures. The company had less than $10bn in long-term debt as recently as 2022, but borrowed $55bn in globe-trotting deals in recent months. In October, it raised $27bn in a bond sale through a joint venture with private capital firm Blue Owl to build a Manhattan-sized data centre in Louisiana dubbed “Hyperion”. Something we warned would soon become an off balance sheet template for all Mag 7s.""
https://www.zerohedge.com/markets/ringing-bell-met... 