Back in September Twitter raised $1.8 billion in a convertible note offering that exceeded expectations after higher than anticipated demand.
Impressive stuff. However, that debt has now been scored as “junk” status by U.S. ratings agency Standard & Poor’s, who valued Twitter as below investment grade.
AAA is the highest score that can be achieved, and S&P assigned a BB- rating to Twitter, which is considered “speculative”. Meaning, anyone who bought or buys the debt from Twitter is taking a considerable risk, at least in the eyes of Standard & Poor’s.
“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 $100m in 2016,” Standard & Poor’s said in a note.
“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.”