Twitter Inc Stock Witness 18% Decline In Short Interest

TwitterElisaRiva / Pixabay

Twitter Inc (NYSE:TWTR) shares have seen a decline of 18% in short interest, according to the latest data released by NASDAQ, for the May 15 2014 settlement date. According to the data, there has been a 9,015,968 share decrease in total short interest for Twitter to 41,082,382, a decrease of 18% since April 30.

Twitter saw a surge in average daily volume at the 15 May 2014 settlement day to 38,827,438, as compared to 15,312,281 on April 30 report.  Days to cover dropped to 1.06, a 67.66% decline from the 3.27 days to cover calculated at the previous short interest data release.

Analysts optimistic on Twitter

Twitter Inc (NYSE:TWTR) shares are expected to rebound, according to the analysts. Last year, in December, when shares were trading at $70 investors were upbeat about the shares, dubbing the company as a potential rival to Facebook Inc, on a size and scale basis. However, the scenario is entirely different now and the shares are trading in the low $30s, raising concerns for investors, says a report from the Wall Street Journal.

Anthony DiClemente, an analyst at Nomura, said that the current value assigned to Twitter Inc (NYSE:TWTR) is based on the expectation that the micro blogging company remains a niche social media product. DiClemente added that he believes Twitter is unlikely to gain that mainstream status, but can still become a profitable enterprise.

DiClemente upgraded Twitter Inc (NYSE:TWTR) to Buy from Neutral maintaining a price target of $43 on the stock. Analysts said, “We believe risk/reward is much more favourable now, given the possibility that product enhancements rejuvenate user growth.”

Twitter need not to be Facebook

Twitter stock recently surged 9.5% to $33.40, but is still 50% down for the year. According to DiClemente, Wall Street perceives Twitter Inc (NYSE:TWTR) as a product that would be just around 20% of the size of Facebook over next three years. He feels that the prediction is very conservative, and if there is any possibility for recent initiative to enhance user growth, there may be addition to the Street estimates. He isn’t the only analyst to recently express some hope in Twitter’s next move.

Robinson Humphrey, analyst with Atlanta, Ga based Sun Trust also upgraded ratings on Twitter citing that the company does not have to replicate Facebook to justify its valuation.

Recently, user growth in Twitter Inc (NYSE:TWTR) has declined, impacting the share price. Even though the downward trend has continued for over a month now, Twitter stock is still trading above $26 IPO price.

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About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at [email protected]

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