Twitter receives 8216 junk 8217 credit rating

US ratings agency Standard & Poor’s has given Twitter’s debt ‘junk’ status

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By :  ,  Financial Analyst

US ratings agency Standard and Poor's (S&P) rated the debt of Twitter as "junk".

S&P said the social network's $1.8 billion (£1.1 billion) latest debt issue was worthy of a BB-, three notches below investment grade. It added that Twitter needs to boost revenues in overseas markets before the agency would consider raising the rating.

"We could raise the rating if Twitter broadens its revenue sources through international expansion and new product launches, maintains its market position, continues to improve its profitability, and achieves positive and sustained discretionary cash flow in excess of $100 million in 2016," S&P said in a statement.

"The company is investing very aggressively in growth. Depending on the level of business reinvestment, Twitter may not generate positive discretionary cash flow until 2016."

However, S&P put a stable outlook on the company as it expects it "to experience very strong growth and not encounter a significant increase in competitive pressure".

In the latest quarter, the company reported a surge in sales, but still made a net loss of $175.5 million in the quarter.

The company also said its fourth quarter revenue might fall short of market expectations of $448.8 million. S&P still doesn't expect the social media firm to post positive cash flows until 2016.

The social network has a user base of 284 million people that has grown by nearly 25 per cent over the last year.

The rating came just a day after Twitter announced new features including the ability to upload and share videos directly to Twitter, and customising the way tweets are shown.

Twitter shares tumbled down nearly six per cent after the announcement. Its shares have lost 37 per cent so far this year.

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