Twitter Inc Stock Drops Following Morgan Stanley’s Coverage

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Twitter Inc (NYSE:TWTR) stock dropped Monday following a report from Morgan Stanley initiating coverage on the equity, and assigning an Equal Weight rating to the stock. The MS analysts based their neutral outlook on the company’s slower than expected monthly average user growth, and also expect a deceleration in net ad revenue in 2015 and 2016. Morgan Stanley put a price target of $42 on Twitter shares.

Twitter improves monetization

However, Morgan Stanley did note that the “Monetization of registered users” is improving helped by a “mix of higher priced ad units.” On narrowing the monetization gap with Facebook, the report characterizes such expectations “as optimistic given inherent differences in time spent and engagement vs. impression-based ad selling.”

Separately, analysts at Monness Crespi & Hardt initiated coverage on Twitter with a research note to investors on Monday morning. The firm assigned a Neutral rating to the stock along with a price target of $40.00. Also, MKM Partners decreased their price target on the stock from $64.00 to $61.00 in a research note on Friday. They have assigned Buy rating to the micro-blogging site. Finally, the analysts at Zacks have maintained their Neutral rating on the stock and assigned a price target of $46.00 in a research note to investors on October 29th.

Overall, three research analysts have assigned a Sell rating to the stoc,k while twenty-six have rated the stock as a Hold and twelve consider it a Buy. Presently, Twitter has a consensus rating of Hold and an average price target of $50.69

Weak 3Q numbers

In the third-quarter, Twitter Inc’s revenue increased to 361 million dollars, a surge of 114% from the corresponding period last year. However, monthly active users of the service increased just 13 million to 284 million from the previous quarter. Analysts expected the growth to be between 14 million and 17 million.

Twitter has reshuffled management and undertaken a few changes in its platform to make it easier for users to access the site. Revenue is surging strongly, but Twitter is still not profitable. It reported a net loss of 175 million dollars for the quarter, an increase from 64.6 million dollars in the same quarter last year.

On Monday, Twitter shares were down 3.04% to $40.21.

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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

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