Twitter Inc (NYSE:TWTR) shares have been on a tremendous tear in recent weeks as excitement over the newly public company’s future dominated on Wall Street, but is the tiding starting to change? Analysts are becoming increasingly cautious about the company because of the rapidly increasing stock price. Macquarie downgraded the stock today, possibly contributing to the early 5% decline in share price.


Just a short Twitter downgrade note

When analyst Ben Schachter issued his downgrade note, he said it would probably be one of the shortest downgrade notes investors would ever read. He initiated coverage of Twitter Inc (NYSE:TWTR) on Dec. 11 with a Neutral rating. At that time he was already concerned about the company’s share price. He believed then that Twitter was worth $46 per share.

The analyst said the reason his downgrade note was so short was because nothing had really fundamentally changed with Twitter. He now has an Underperform rating on Twitter shares—purely because of their rapid appreciation in price with virtually no news to push them so high. Shares have risen 62% since the company’s initial public offering in early November. Overall, Schachter still likes Twitter’s potential, but he thinks nothing has changed over the last couple of weeks to justify the increase in valuation. The analyst still has a $46 per share price target on Twitter.

Twitter volume to edge higher again

No one really knows why Twitter Inc (NYSE:TWTR)’s stock has soared in recent weeks, although to me this sounds like investors have gone on an emotional binge by snapping up Twitter shares. Thursday’s astronomical increase in the volume of Twitter shares traded suggests that this may be a fair assessment.

Before Thursday, Twitter’s trading volume was a little over 15 million shares, but the company’s volume rose so high—up over 61 million shares before the end of the day—that today Twitter’s average volume is nearly 18 million shares. Already today (as of 10:35 E.T.), more than 15.5 million shares of Twitter Inc (NYSE:TWTR) have changed hands, suggesting that the micro-blogging site’s average volume could receive another significant boost today. This time, however, the greater volume might be more of a negative than a positive, as it was yesterday.