Twitter Inc (NYSE:TWTR) shares have had another rough trading day today, but it looks like that may be turning around. Shares declined 13% on Friday, and today, they initially fell another 6%. However, as of now they have partially recovered and are down by only about 1%, hovering right around Friday’s closing price.
Analysts cautious about Twitter
The main reason Twitter Inc (NYSE:TWTR) saw its valuation fall so far so fast was because analyst after analyst was becoming cautious about the company’s valuation. On Friday alone, Twitter lost $5 billion in market capitalization as investors started to worry after numerous warnings from more than one analyst firm. On Thursday, shares surged, but no one really knew why.
Investors have been excited about Twitter since it debuted on the New York Stock Exchange, but the company has yet to turn a profit. In fact, analysts say investors shouldn’t expect to see profits from the micro-blogging site until 2015.
Average analyst PT for Twitter: $44
Mashable cites Bespoke Investment Group in saying the average analyst price target on Twitter Inc (NYSE:TWTR) is $44 a share. That’s still significantly lower than the company’s current more-than-$60 a share value, but investors aren’t letting it drop down that low.
Volume on trades of Twitter stock skyrocketed on Thursday when FactSet reports that 82.7 million shares changed hands. Thursday’s soaring price was answered on Friday with more than 60 million shares traded and dragging the price down. Today’s volume is lower than Friday’s at about 43 million shares, but it’s still more than double the new average daily volume, which is now up to 19.5 million after Thursday’s and Friday’s skyrocketing volumes. So no matter how you look at it, Twitter Inc (NYSE:TWTR) is still a hot stock. Its shares are changing hands a lot more rapidly than Apple Inc. (NASDAQ:AAPL)’s are.
Will investors let Twitter’s valuation dip down to the range where analysts are comfortable? That remains to be seen, but if this first couple of months is anything to go by, 2014 could be a very active year for Twitter stock.