Twitter holds onto gains in spite of downgrade, valuation critiques

Though off its intraday high of $50.09 (achieved shortly after shares began trading), Twitter (TWTR +78.9%) remains above its opening level of $45.10. 89M shares have been traded so far, after 70M were sold in the company's $1.82B IPO.

Twitter is staying strong even as Internet peers (many of which soared earlier this year) sell off, and Pivotal Research's Brian Wieser issues a two-notch downgrade to Sell, citing valuation; the firm has slightly lifted its PT to $30 from $29.

Wieser: "One way to justify a $45 price in our model would involve presuming that Twitter could generate more than [$6 billion] in annual revenue by 2018 ... "However, we think that would seem overly optimistic to us given our best assessment of the industry and the business at this point in time."

Six other firms still have bullish ratings on Twitter, but only two - Topeka and SunTrust - have PTs above Twitter's current trading price. With shares trading at over 45x 2013E sales after factoring options/RSUs, critiques of its valuation are easy to find today.

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Comments (2)
  • DeepValueLover
    , contributor
    Comments (11388) | Send Message
    Remember 1999?


    I do.
    7 Nov 2013, 02:46 PM Reply Like
  • Chris Lau
    , contributor
    Comments (4287) | Send Message
    @DeepValueLover, as do I, but not the new players on the market. The market has no idea that followers on twitter are mostly spam and bots and SEOs. (TWTR) is going to get crushed by (GOOG) Plus, Instagram, and even (BBRY) Channels, if BB can do things right.
    7 Nov 2013, 03:05 PM Reply Like
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