By Jordan Faigen
Last Wednesday, Twitter (TWTR) was one of the notable technology stocks to rise in the market.
Twitter in the News
But, while other technology stocks were falling behind Twitter Inc (NYSE:TWTR) last week, the stock still poses many concerns to investors.
Twitter Inc (NYSE:TWTR)’s user growth has been a point of contention for investors. Back in March, the company revealed that as of Q4 2013, user growth was just under 40% compared to growth of 140% within the past three years. Investors were disappointed with the company’s decline in growth and many financial experts were recommending to SELL the “dying social networking site”. Over the past few days, market research has released projections showing that Twitter’s worldwide user base will continue to grow over the next five years, but at a diminishing rate. The projected data even suggests that Twitter’s user growth will enter the single-digit-percentages by 2015.
What Does This Mean for Twitter’s Stock?
Seeking Alpha contributor, Stock Traders Daily, still believes that Twitter poses a risk for investors. Stock Traders Daily is concerned about the negative news he is hearing and believes that the stock is deteriorating and unhealthy. He saw Twitter as great short and still believes that the company has not done enough to make a compelling BUY. Stock Traders Daily has a +2.0% average return per recommendation and a 56% success rate of recommendations.
On the other hand, the possible future of Twitter is just a projection right now. Cantor Fitzgerald analyst Youssef Squali recommends BUY Twitter following the company’s largest gain of 14% since December. Squali upgraded the stock arguing that there needs to be, “Less emphasis on user growth, more on monetization. When taken in isolation, Twitter’s user engagement metrics in the first quarter were impressive, up double digits year-over-year, but when compared to Facebook at roughly the same size, Facebook Inc (NASDAQ:FB) was growing triple digits.” Squali also noted that, “We think Twitter should show substantial revenue growth/margin expansion and generate meaningful returns to shareholders without having to mirror Facebook Inc (NASDAQ:FB)’s model/approach its size.” Squali has a +13.3% average return per recommendation and 71% success rate of recommendations.
Conclusion
Twitter Inc (NYSE:TWTR) is still trading above its IPO price. However, the stock continues to baffle financial experts with its dwindling growth. Which side of the fence will you be tweeting from?
Jordan Faigen covers financial markets and the latest stock market news. She can be reached at [email protected]
