Twitter, Inc. (NYSE:TWTR) announced that it was raising $600 million in senior unsecured notes that will mature in 2027
Yesterday, Twitter (NYSE: TWTR) announced that it was raising $600 million in senior unsecured notes that will mature in 2027. The offering won’t be available to public investors, with the notes being issued in a private placement to qualified institutional investors. Certain details around pricing and interest rates have not been determined yet.
Here’s what investors need to know about the notes.
Out with the old debt, in with the new debt
It may seem unnecessary for the tech company to issue paper, considering the fact that it has been consistently generating positive adjusted free cash flow for the past three years. Twitter has even been able to maintain a streak of posting GAAP profits, although the company missed expectations last quarter in part due to bugs in one of its ad products that impacted advertising revenue.
Twitter says it will use the proceeds from the offering for general corporate purchases, along with some other standard boilerplate language referencing capital expenditures, working capital, and acquisitions. The company clarifies that it does not currently have any major deals or strategic transactions pending.
Last quarter, a debt maturity took a bite out of Twitter’s cash position. The company had issued $935 million in convertible senior notes back in 2014 that matured during the quarter, which is largely why its cash, cash equivalents, and short-term investments declined $870 million sequentially despite the company generating $166.5 million in adjusted free cash flow.
Twitter said in October that it had already lined up the cash to repay the 2014 notes, using proceeds from another bond offering from last year. “As planned, we retired approximately $935 million of convertible debt at maturity in September using cash on hand, having issued convertible notes in 2018 with net proceeds of approximately $1.1 billion to prefund this maturity,” the company wrote in its shareholder letter.
The only other debt in Twitter’s capital structure, before including this most recent offering, consists of $954 million in convertible notes due in 2021 and $1.15 billion in convertible notes due in 2024.
Filling up the war chest
CFO Ned Segal also suggested that Twitter just wanted to beef up its coffers in case of a rainy day. Recession fears have receded somewhat in recent months, but the global macroeconomic environment still remains uncertain due to trade tensions and Twitter might as well take advantage of low interest rates.
“When we think about uses of cash, we think about being able to run the business through any environment,” Segal said on the October earnings call. “We think about and often challenge ourselves around the optimal use in terms of benefiting our shareholders.”
Twitter also wants to keep some powder dry in case it decides to pull the trigger on any acquisitions. The company has made nine acquisitions so far in 2019.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
The projected upper bound is: 33.46.
The projected lower bound is: 25.95.
The projected closing price is: 29.70.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 22 white candles and 28 black candles for a net of 6 black candles.
A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 45.2191. This is not an overbought or oversold reading. The last signal was a sell 1 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 38.04. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 7 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -9. This is not a topping or bottoming area. The last signal was a sell 1 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 15 period(s) ago.
Rex Takasugi – TD Profile
TWITTER INC closed down -0.450 at 29.970. Volume was 2% above average (neutral) and Bollinger Bands were 61% narrower than normal.
Open High Low Close Volume___
29.880 30.000 29.480 29.970 3,063,615
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 30.24 34.42 36.60
Volatility: 24 68 52
Volume: 3,067,173 3,186,896 2,963,626
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
TWITTER INC is currently 18.1% below its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect volume flowing into and out of TWTR.N at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on TWTR.N and have had this outlook for the last 1 periods.
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