Snap, Inc. ( SNAP ) shares are trading lower Thursday after the company announced the pricing of a private offering of $650 million of convertible senior notes due 2030.

The Details:

Snap announced that it intends to offer a $650 million aggregate principal amount of convertible senior notes due 2030 in a private placement to qualified institutional buyers. Snap also intends to grant the initial purchasers of the notes an option to purchase up to an additional $100 million aggregate principal amount of notes.

The notes will have an initial conversion rate of 45.0846 shares of Snap Class A common stock per $1,000 principal amount of notes, equivalent to an initial conversion price of approximately $22.18 per share. The initial conversion price represents a premium of approximately 32.5% to the $16.74 per share closing price of Snap stock on May 8. 

Snap estimates that the net proceeds from the offering will be approximately $641.6 million, or approximately $740.4 million if the initial purchasers exercise their option to purchase additional notes in full. 

Snap said it intends to use approximately $159.4 million of the net proceeds to repurchase approximately $147.9 million aggregate principal amount of its outstanding convertible senior notes due 2025, approximately $259.5 million to repurchase approximately $237.5 million aggregate principal amount of its outstanding convertible senior notes due 2026, and the remaining net proceeds from the offering for general corporate purposes.

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Should I Sell My SNAP Stock?

When deciding to hold on to or sell a stock, investors should consider their time horizon, unrealized gains and total return.

Shares of Snap have increased by 87.89% in the past year. An investor who bought shares of Snap at the beginning of the year would make a profit of $0.3 per share if they sold it today. The stock has risen 51.1% over the past month, meaning an investor who bought shares on April 1 would see a capital gain of $5.36.

Investors may also consider market dynamics. The Relative Strength Index can be used to indicate whether a stock is overbought or oversold. Snap stock currently has an RSI of 85.06, indicating overbought conditions.

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SNAP Price Action: According to Benzinga Pro, Snap shares are down 1.73% at $16.45 at the time of publication Thursday.

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