Standard & Poor's Ratings Services on Thursday assigned Twitter Inc. (NYSE:TWTR) a junk-grade rating.
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The ratings agency gave the San Francisco-based social networking company a "BB-" corporate credit rating, which places the company firmly in the middle of junk-grade territory. The outlook is stable.
S&P said that it believes the company will see healthy growth in active users and revenue, along with minimal debt leverage. But it said that the company is investing very heavily in growth and expects Twitter 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 with industry analysts.
Shares of Twitter, known for its short-burst social media system, fell 5.7 percent to $40.12 in late afternoon trading. The stock has lost more than a third of its value in the year to date.