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Examining Twitter’s Debt Position after 2Q17

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Aug. 24 2017, Published 5:35 p.m. ET

Facebook carries no debt

Twitter’s (TWTR) long-term debt load has been increasing steadily over the last several quarters. Let’s look at the debt situation for Twitter’s rivals.

Facebook (FB), one of Twitter’s main rivals in the online advertising industry, is free of debt. Alphabet (GOOGL), whose Google unit also competes with Twitter in the Internet advertising sector, was carrying long-term debt of $3.9 billion at the end of 2Q17. Alphabet’s debt level has remained fairly steady over the last 12 months.

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Swelling of Twitter’s debt load

Twitter carried long-term debt of $1.7 billion on its balance sheet at the end of 2Q17. Its long-term debt rose from slightly more than $1.6 billion in 1Q17 and from ~$1.5 billion in 2Q16. The chart above illustrates the steady buildup in Twitter’s debt level. 

Twitter’s cash balance has also been improving while its debt has been swelling. The company finished 2Q17 with cash and equivalents of $642.6 million, up from $539.2 million in 1Q17 and up from $288.8 million in 2Q16.

Race to defend and grow market share

Twitter, Google, Facebook, Snap (SNAP), and Yelp (YELP) are in a race to grow and defend their market share in the digital advertising industry. As such, Twitter has been investing in talent acquisitions and R&D (research and development) to help it stay competitive. As a result, the company is incurring high operating expenses.

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