Twitter Inc (NYSE:TWTR) went public this morning, and the event attracted a huge amount of interested. The micro-blogging site listed its IPO at $26 per share, but the company went public at $45.10 earlier today. After an initial flight upward the company’s stock sank back to near opening levels. Sell ratings have started to arrive on the back of the massive valuation.
There is a huge amount of potential at Twitter Inc (NYSE:TWTR), but the company is valued at $30 billion by this morning’s IPO. The risks inherent in a valuation that large are too much to bear for most investors, and analysts have begun to issue their reports on how the stock is, rather than how it might be. The conclusions are not wholly positive.
Twitter sell rating
Twitter attracted a Sell rating from Brian Wieser of Pivotal Research according to Forbes contributor Rupert Hof. The analyst put a price target of $29 on the company and he is not changing it based on the better than expected demand on today’s market. Twitter Inc (NYSE:TWTR) is worth what it’s worth to Wieser, and that’s nowhere near $30 billion.
Another downgrade came from Doug Kass, president of Seabreeze Partners Management, who says that investors should be selling the company’s shares in the high forties, a level they reached earlier today. More analysts will chime in on Twitter Inc (NASDAQ:TWTR) tomorrow. The company’s current valuation is difficult to support and it may be volatile in the days ahead.
It’s been said over and over again. Twitter does not make a profit. The company is hoping to leverage its 200 million user base in order to make money off of advertising. That space is competitive, and Twitter has not really demonstrated any unique offerings. The future looks promising, but it is full of risks.
Today’s market says that a social network that makes no money should be valued at 30 times sales. It says that Twitter Inc (NASDAQ:TWTR) growth is worth betting on at almost any price. Most investors turn around when they are privy to that kind of talk. Twitter may indeed grow by a huge margin in the next decade, but there is no guarantee.