Snapchat’s parent company Snap has announced plans to raise $1 billion in debt financing.
The difference between debt financing and traditional equity funding is that Snap will agree to pay back its investors, as opposed to giving them an ownership stake in the company. That said, the convertible notes that Snapchat is offering are a form of debt that typically converts into equity.
In a release, Snap said it would use the fresh funds “for general corporate purposes, including working capital, operating expenses, capital expenditures,” and added that “Snap may also use a portion of the net proceeds to acquire complementary businesses, products, services, or technologies or for repurchases of Snap’s common stock.”
Shares in the company fell slightly today on the heels of the announcement, Variety notes, though the company’s stock is up 184% year-to-date. Snap has also boasted solid user growth for the first half of 2019; Q2 revenues were up 48% year-over-year — to the tune of $388 million.