The initial public offering (IPO) of Twitter Inc (NYSE:TWTR) created paper millionaires —approximately 1,600 of its employees as the stock price of the popular micro blogging company surged to as high as $74.83 from its offering of $26 per share.
However, many of the paper millionaires of Twitter Inc (NYSE:TWTR) might be considering the idea of selling out their stockholdings early given the bearish position of some Wall Street analysts covering the stock.
Welcome to our latest issue of issue of ValueWalk’s hedge fund update. Below subscribers can find an excerpt in text and the full issue in PDF format. Please send us your feedback! Featuring Andurand's oil trading profits surge, Bridgewater profits from credit, and Tiger Cub Hedge Fund shuts down. Q1 2022 hedge fund letters, conferences Read More
Analyst downgrades of Twitter
Over the past week, the stock price of the micro blogging company dropped around 17% including a 4% decline early this week after Morgan Stanley analyst Scott Devitt lowered his recommendation for the shares of Twitter Inc (NYSE:TWTR) to underweight, which is equivalent to a Sell rating.
Devitt opined that Twitter’s success is far from guaranteed although he believed that it is a compelling platform for social networking. According to him, the company is at risk of remaining a “niche product” and it is difficult for it to expand to a broader, money generating audience.
Aside from Morgan Stanley, other brokerage firms issued bearish positions on Twitter Inc (NYSE:TWTR). Cantor Fitzgerald issued a Sell rating while Cowen & Co. initiated an underperform rating for the stock. A significant number of analysts covering the stock believe shareholders should sell their stockholdings in the company.
Neil Doshi, analyst at CRT Capital opined that investors want to see evidence that the new products of Twitter Inc (NYSE:TWTR) such as the Tailored Audiences and MoPub Native Ads are effective and attracting marketers. He also downgraded his rating for the stock.
The stock price of the company is falling for the fifth consecutive day as investors are increasingly uncertain regarding its ability to deliver sufficient sales growth to justify its high valuation, which peaked at $40 billion – almost in the same level as established companies such as FedEx Corporation (NYSE:FDX) and Target Corporation (NYSE:TGT).Twitter Inc (NYSE:TWTR) is currently trading around $57 per share, and its market capitalization is approximately $31 billion.
First quarterly financial result as a public company
Twitter Inc (NYSE:TWTR) is scheduled to report its first quarterly financial results as a public company on February 5. Data from FactSet showed that analysts expect the company to post $0.02 loss per share in $217 revenue for the fourth quarter.
Analysts and investors will carefully evaluate the financial results of the company to find signs whether its products and services are capable of increasing its advertising revenue. If not, its paper millionaires might be spooked and decide to sell off their shares.
Updated on
Elliott wave analyst predicts shares to soar after lag down around 55…
This message is for the uneducated investors buying TWTR at EXORBITANT
inflated prices, and the warnings of the many supposed expert analysts (see
recent downgrades below – down as low as $30 with average price target = $40),
may I borrow your shares so I can sell TWTR short? I promise to pay reasonable interest, so long
as you allow me to cover my short Feb 17 – AFTER they announce their quarterly loss
on Feb 5 and allow employees to dump their stock, causing big dilution on Feb
15.
Date Firm Type Rating Price Target
1/9/2014 Cowen & Co New Coverage SELL 32
1/8/2014 Cantor
Fitzgerald Downgrade SELL 32
1/6/2014 CRT Capital Downgrade Fairly Valued N/A
1/6/2014 Morgan Stanley Downgrade Underweight 33
12/27/2013 Macquarie Downgrade Underperform 46
12/17/2013 Atlantic Equities Downgrade Neutral 50
12/16/2013 Wells Fargo Downgrade Underperform 37.5
12/16/2013 SunTrust Robinson Downgrade Neutral 50
12/2/2013 BofA/Merrill Lynch New Coverage Underperform 36
11/20/2013 Cantor Fitzgerald Downgrade Hold 32
Also interesting to note: none of my three teenagers use
Twitter, but they are always on Instagram (owned by Facebook) and
SnapChat. Who is going to be reading all
those future TWTR mobile ads? Will the advertisers
show up??
Comments are closed.