Twitter Inc (TWTR) Stock Still Overpriced Despite 47% Decline

Twitter Inc (TWTR) Stock Still Overpriced Despite 47% Decline
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Twitter Inc (NYSE:TWTR) stock has plunged about 47% from its December 26 peak of $74 to close Friday at $39. While many would consider the stock inexpensive at this level, Barron‘s believes Twitter is still overpriced. It is trading at a big premium compared to other Internet stocks based on the price to sales ratio. The microblogging company is valued at about 20 times its estimated 2014 revenue of $1.225 billion. In contrast, Facebook Inc (NASDAQ:FB) is trading at a relative bargain of 12x its projected 2014 revenue.

Twitter will still trade at a premium after falling to $30

Barron’s noted that Twitter Inc (NYSE:TWTR) seems to be “a long way from profitability.” A big concern around the San Francisco-based company is its slowing user growth. Despite Twitter’s efforts to make its platform more appealing, the number of U.S. monthly active users of 57 million appears to be plateauing. Barron’s said Twitter’s “quirky format” makes it difficult for the company to become a mass-market medium like Facebook Inc (NASDAQ:FB). The company’s user base grew at just 6% QoQ during the latest quarter. However, Twitter is doing well on advertising front. Its ad revenue per 1,000 timeline views almost doubled to $1.44.

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