It’s been a roller coaster week for Twitter. On Wednesday, it hosted its first Analysts’ Day as a publicly-traded company, and shares of Twitter (TWTR) rallied. The social networking service announced new features to attract would-be tweeters. On Thursday, Twitter’s debt was rated junk by Standard and Poor’s and the stock came tumbling back down again.
It was an unsolicited rating, and it comes as no surprise to those who follow the company. Yahoo Finance’s Henry Blodget says, “They are losing money, boatloads of money, and there is still a lot of risk around the business model. It’s an emerging company.”
However, Blodget doesn’t think it was a mistake for Twitter to issue debt, and he believes the junk rating right now is meaningless. He points out that Twitter as a business should have very low costs, and could deliver on ambitious projections down the road. Facebook (FB) has been able to develop staggering margins. Blodget says, “Hopefully Twitter is in a period where they are investing heavily and it will payoff.”
Over the past few quarters, big investors have cut their positions in Twitter, and that has put CEO Dick Costolo under fire in the press and on Wall Street. Changes among executives and Costolo's uneven leadership style have stirred calls for changes at the top. Blodget says Costolo is "incredibly talented" and a "good leader... he's going to have a tough challenge coming through this, but it’s definitely survivable.”
Blodget says his "issue with Twitter is that the management team seems just incredibly frustrated that they aren’t valued at the same level as Facebook.” He says Twitter's stock price reflects where it is as a company.
The goal of Analysts' Day was to put investors fears to rest. Twitter announced it will roll out new features. The changes will include everything from an easier way to share videos to a better, more secure method to talk privately to other users, to feed improvements that will make sure key tweets aren’t missed when users are offline.
Twitter is trying to make it easier for new users to sign up and get comfortable with the social media outlets. A new feature will be called “Instant Timeline” and will allow new users to pick from categories when they initially sign up. A feed of those categories like sports, television or technology will be shown to the first time users. The company also plans to do a better job of explaining to new users how to use the service and understand its lingo.
The announcements come as investor criticism over the social network's slow growth gets louder. Investors worry that Twitter isn’t attracting and retaining the typical Internet user like Facebook and Pinterest do. According to the company, Twitter has 248 million monthly active users who churn out more than 500 million tweets per day. But investors haven’t been overly impressed with the lack of growth and the company’s inability to move away from the sort-of group text messaging model it started with.
More from Yahoo Finance