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Twitter share price tanks after receiving junk bond rating from Standard & Poor’s
Twitter’s share price dropped almost by almost six per cent today, after its bonds received a junk rating from Standard & Poor’s.
The social media site’s bonds were slapped with a below investment level ‘BB-’ rating. Twitter issued $1.8bn worth of convertible notes in September.
However, S&P said in a statement that Twitter company had a “fair” risk profile and its outlook was “stable”. It expects the company “to experience very strong growth and not encounter a significant increase in competitive pressure.”
Twitter’s share price closed at a price of $40.04 per share tonight, a 5.88 per cent fall on the day’s opening price of $43.55 per share.
Shares had climbed by as much as seven per cent over the week after CEO Dick Costolo delivered an encouraging analysts’ call.
They have now dropped back to levels seen at the beginning of the week following S&P’s junk rating.
A S&P statement said:
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.
No pressure then.