Twitter Inc Stock Hurt By Investor Misinformation: S&P’s Kessler

Updated on

Twitter Inc (NYSE:TWTR) stock faced a steep decline due to misinformation among the investors, said analyst Scott Kessler, head of Technology Research for S&P Capital IQ on BNN’s “The Street.”  According to Kessler, investors are focusing the wrong aspect of the company.

“I think there is a disconnect in the marketplace, where a lot of people are focusing on the notion of user growth and engagement growth as Twitter kind of indicated that we should last year when they were in the process of coming public,” said Kessler.

Investors care about user growth

Kessler believes majority of the investors are concentrating on the user growth, which is not rampant, instead they should focus on other metrics such as retweets and favorites that increase at double the rate. Kessler’s firm upgraded the stock to a Buy few weeks ago.

He added that the metrics provided are not relevant compared to what they were six months ago. According to Kessler, Twitter Inc (NYSE:TWTR)’s top management has failed to communicate their positively growing metrics, which have substantial and growing appeal for advertisers.

The acquisition of ad serving platform MoPub, around the time of IPO, has greatly helped Twitter to boost its mobile presence, believe Kessler.

Twitter trades at attractive value

Twitter Inc (NYSE:TWTR) launched it’s IPO on November 6th at $26 per share and the stock closed its first day of trading at $44.90, but has since then has been on the decline, and is presently trading around the $30 mark. Twitter trades at about fifteen times its revenue outlook in 2014. According to Kessler, it is an attractive price point for investors given all the information available in the market.

Twitter Inc (NYSE:TWTR) is facing a challenge to hold on to the new users, who are confused by the product redesign, owing to various changes such as redesigning the profile page and new features such as muting.

The micro blogging site has also posted increased growth in revenue compared to other successful social networking companies. Also, Twitter has faster user growth than Facebook.

According to CEO Dick Costolo, Twitter Inc (NYSE:TWTR) is similar to YouTube, whose content is all over the internet and is viewed by millions of subscribers, which is far more than its registered users.

Leave a Comment

Signup to ValueWalk!

Get the latest posts on what's happening in the hedge fund and investing world sent straight to your inbox! 
This is information you won't get anywhere else!