Twitter Gets Junked by S&P

[responsive]twitter-dead-cropped[/responsive]Last week we talked about investor speculation in light of the one-year anniversary of Twitter’s IPO. While they were doing well, they weren’t doing great, and that was enough to cause jitters on Wall Street.

Well, things have taken a decidedly downward turn for the bird, after being slapped with a junk rating by Standard & Poor’s.

“The BB- rating from S&P is reserved for companies where the business looks relatively stable in the near-term, but faces major ongoing uncertainties to adverse business, financial and economic conditions,” writes Alanna Petroff in CNN Money.

“Twitter is working aggressively to expand its user base and revenue, but S&P still doesn’t expect the social media firm to post positive cash flows until 2016,” Petroff continues.

The announcement caused a 6% drop the next day, down more than a third overall since January.

“That makes it the biggest loser on CNNMoney’s Tech30 index,” Petroff notes.


The real culprit for the rating, according to Petroff, is bond debt, issued to help raise money for its operating costs and potential acquisitions.

With 284 million users, up 25% over the same time this year, Twitter seems like it should be in good shape. But users along do not a business model make, as they are finding out.