As Meta's stock slides, investors are flocking to its bonds and other Magnificent Seven debt

By Ciara Linnane

Bondholders appear unfazed by the spending plans that have sent the Facebook parent's stock down 13% on Thursday

As Meta Platform Inc.'s stock suffers a bruising 13% rout on Thursday, investors are flocking to its bonds, which are seeing the most net buying of any of the so-called Magnificent Seven companies.

The debt of the other members of the group that have outstanding bonds are also in demand, however. Tesla Inc. (TSLA) is the outlier in the group, after issuing convertible bonds in the past that have since been converted to equity.

The following chart from data solutions provider BondCliQ Media Services shows the trend with Meta (META) attracting by far the most interest. That's after its stock fell sharply in the wake of quarterly earnings that upset investors with the news that the company is planning capex of up to $40 billion this year and a renewed focus on the metaverse.

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The selling spilled over to the stocks of four other Magnificent Seven companies, namely Microsoft Corp. (MSFT), Amazon.com Inc. (AMZN) and Alphabet Inc. (GOOG) (GOOGL), whose shares are all off more than 3%, while Apple Inc. (AAPL) is down a more modest 0.2%. The other member of the group is Nvidia Corp. (NVDA), which is up 2.4%.

Bondholders appear unfazed, no surprise given the generous yields the group is currently offering after this year's spike in Treasury yields.

As MarketWatch wrote earlier this week, even the group's two-year bonds are currently yielding more than 5% and they are all available at a discount. That's a nice return for investors who are perturbed by the volatility in their stocks, or who just want to put some cash to work for a short time frame.

Worried about the volatility in Magnificent Seven stocks? Take a look at the companies' short-dated bonds.

All six issuers have ratings in the A category, and Microsoft has pristine Triple A ratings from S&P Global Ratings and Moody's Ratings.

Apple has the most outstanding debt of the group.

Microsoft and Alphabet Inc. are due to report quarterly earnings after the bell on Thursday.

For live coverage, see: Microsoft suffers selloff ahead of earnings

-Ciara Linnane

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04-25-24 1225ET

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