Twitter Inc (NYSE:TWTR) aims to grow large

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By Thomas Copeland on September 12, 2014 Social Media

Twitter Inc (NYSE:TWTR) aims to expand in the coming years and for that purpose it will be offering $1.5 billion worth of convertible notes. The convertible bonds are said to be sold in two parts- 650 million each and will mature in about half a decade. Twitter Inc (NYSE:TWTR) has poster a better than expected revenue and as a result its shares have literally soared. This along with their announcement to raise debt and expand the company will result in the shares probably raising higher. Analyst forecasts suggest that Twitter (NYSE:TWTR) as of late has been showing an appetite for large scale deals- evidence being their acquisition of SoundCloud.

Twitter Inc (NYSE:TWTR) financially speaking has opted for buying big and small companies alike which would make them bigger and better than they already are. To add diversity to their offering they have purchased a startup which goes by the name of SnappyTV. This will offer video editing to their customers, since the trend for sharing videos on the social media is on the rise, getting something which can tackle the media giant YouTube’s offering will one-up Twitter (NYSE:TWTR) for sure. An acquisition is bound to get you money in the long run, the biggest example being YouTube for its parent company Google (NASDAQ:GOOGL).

Even though Google’s (NASDAQ:GOOGL) acquisition of Youtube was dubbed over-priced, as it turns out YouTube makes a large revenue for Google (NASDAQ:GOOGL) which is around 10 percent of its annual revenue. Mark Zuckerberg has made some smart acquisitions as well, like WhatsApp and is riding high on the acquisition wave. Twitter Inc (NYSE:TWTR) will take some time to stand nose to nose with the social media giant however since Twitter Inc (NYSE:TWTR) hasn’t really been around for much time, it still has the right strategies. Social Media when we talk about the very white, male population is ruled by Twitter Inc (NYSE:TWTR)’s. Whereas a very diverse audience exists for Facebook Inc (NASDAQ:FB).

Also the Fed will be increasing the benchmark rates over the coming years which will give rise to the interest rates, hence now is the right time for Twitter Inc (NYSE:TWTR) to raise some money with a reasonable interest rate payout. Federal Reserve currently is offering near zero debt rates, which is causing companies in the U.S to sell a staggering amount of debt. As of now, 1.07 trillion in bonds have been sold. Now is the right time for such moves otherwise when the interest rates go up and your company needs funds to expand, debt would be a very costly option.

The Twitter (NYSE:TWTR) debt offering will be divided into two equal parts of $650 Million each which will each mature in 2019 and 2021. It will offer initial purchasers up to $100 Million in both of these offerings separately. Point to note here however is that part of this money will go into general purposes which is bound to raise some eyebrows. But to give Twitter (NYSE:TWTR) credit, ‘corporate purposes’ are something which can be avoided no matter if its expansion or routine operations…