Twitter debt downgraded to ‘junk’ status by leading rating agency
Twitter’s struggle for stronger earnings growth has taken a knock after a leading US ratings agency downgraded its debt to ‘junk’ status.
Standard & Poor’s move saw Twitter’s shares falling six per cent on the New York Stock Exchange as investors digested its ramifications.
It comes as the micro blogging platform continues an aggressive acquisitions strategy despite a failure to fully monetise its platform, rankling many who wonder when, if ever, the site will deliver on its promise of a profits bonanza.
In a note accompanying their decision S&P observed: “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."
Twitter has been hit by a slew of disappointing figures in recent months, notably a seven per cent fall in timeline views per user in October, despite growing its user base by 23 per cent. The social network has also cautioned that its fourth quarter revenues may miss expectations of $448.8m.
S&P closed by warning that though Twitters rating could be raised of these fundamentals showed signs of improvement – it could also be lowered.