"While historically we've reserved our Sell rating to business models with structural challenges, we find Twitter's (TWTR) valuation to be excessive and currently see materially more downside than upside," says analyst Youssef Squali, cutting the stock to a Sell while maintaining a price target of $32.
Twitter, he says, is expensive even compared to a number of other high-flying Internet IPOs. Its 30.8x EV/Revenue multiple compares to about 15x for Google, 16.5x for LinkedIn, 8.5x for Facebook, and 4x for Yelp shortly after they came public.
Sqauli also notes the estimates of analysts whose banks were involved in the IPO are lower than those who were not involved.
Lock-ups? The first expiration is on February 15 when 9.9M shares by non-execs will be eligible for sale. A much larger expiration is coming in early May when 454.3M shares could become available.
The stock's off 2.9% premarket.