Twitter given junk credit rating

Standard & Poor’s Ratings has assigned Twitter a junk-grade rating while also describing it as having strong growth prospects.

The ratings agency gave the San Francisco-based social networking company a BB- corporate credit rating, which places it firmly in the middle of junk-grade territory. The outlook is described as stable.

Shares of Twitter fell 5.7% to $40.12 in late afternoon trading on Thursday. The stock has lost more than a third of its value in the year to date.

S&P predicted Twitter would see healthy growth in active users and revenue, along with minimal debt leverage. But its very heavy investment in growth meant it might not have positive cash flow for discretionary use until 2016.

Jim Prosser, a spokesman for Twitter, pointed to S&P’s own words as comment: “Twitter will continue to experience very strong growth and not encounter a significant increase in competitive pressure.”

The rating is unsolicited, meaning that S&P is basing it solely on publicly available information and that it may not necessarily involve the participation of Twitter.

The action comes a day after Twitter’s first-ever analyst day where it discussed its vision, strategy, finances and other matters.

This report uses material from the Associated Press