By Nico Willson for Kapitall.
Twitter ( TWTR ) announced its first ever debt offering on Thursday as the company seeks to raise up to $1.5 billion for acquisitions and expansion. Friday morning Twitter increased the total debt sale to $1.8 billion, raising its convertible bonds into two $900 million pieces, the first maturing in 2019 and other half in 2021.
According to a source familiar with the matter, Twitter has seen an opportunity in the debt market to raise more cash cheaply with little immediate dilution of their shareholders' ownership. This move has been inspired by technology leaders Google ( GOOGL ) and Netflix ( NFLX ) , who both offered debt earlier this year to take advantage of the currently low interest rates.
It is likely that deals of this nature will soon become more expensive for borrowers-the general expectation is that the Fed will raise benchmark rates as the government's quantitative easing program comes to an end.
Why so much cash? Although Twitter's official statement is not so explicit, it is likely that it is not only taking advantage of current low interest rates but also pooling cash in order to make some new acquisitions to increase its revenue stream. The San-Francisco based social-networking service has made multiple acquisitions in 2014 alone and has begun testing a 'Buy' button on its platform to enable instant purchasing. The company believes this may provide a new revenue stream, which is currently heavily reliant upon advertising.
How will the stock market react to Twitter's heavy wallet? Do markets react negatively or positively to debt-offerings?
Use the information below to begin your own analysis and let us know what you think in the comments.
Click on the interactive chart to view data over time.
1. Twitter, Inc. ( TWTR , Earnings , Analysts , Financials ): Is a global platform for public self-expression and conversation in real time. Market cap at $31.64B, most recent closing price at $52.64.
2. Netflix, Inc. ( NFLX , Earnings , Analysts , Financials ): Provides subscription based Internet services for TV shows and movies in the United States and internationally. Market cap at $28.72B, most recent closing price at $481.56.
3. Google, Inc. ( GOOGL , Earnings , Analysts , Financials ): A technology company, builds products and provides services to organize the information. Market cap at $395.87B, most recent closing price at $591.11.
© Kapitall , Inc. All rights reserved. Kapitall Wire is a division of Kapitall, Inc. Kapitall Generation, LLC is a wholly owned subsidiary of Kapitall, Inc.
Kapitall Wire offers free cutting edge investing ideas, intended for educational information purposes only. It should not be construed as an offer to buy or sell securities, or any other product or service provided by Kapitall Inc., and its affiliate companies.
Open a free account today get access to virtual cash portfolios, cutting-edge tools, stock market insights, and a live brokerage platform through our affiliated company, Kapitall Generation, LLC.
Kapitall Wire is a division of New Kapitall Holdings, LLC. Kapitall Generation, LLC is a wholly owned subsidiary of New Kapitall Holdings, LLC. Kapitall Wire offers free investing ideas, intended for educational information purposes only. It should not be construed as an offer to buy or sell securities, or any other product or service provided by New Kapitall Holdings, LLC, and its affiliate companies.