Seeking Alpha

Twitter cut to Sell at Cantor; off 2.9%

  • "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.
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Comments (6)
  • benitus
    , contributor
    Comments (2030) | Send Message
     
    It's about time, some sensible analyst have the courage to say it like it is. Sell, sell, sell. It's a bubble waiting to burst, so head for the hills and get out while you can, if the last two days still hadn't convinced you of its impending demise.
    8 Jan 2014, 08:22 AM Reply Like
  • Olivier Forgues
    , contributor
    Comment (1) | Send Message
     
    http://bit.ly/19dB2F0
    Elliot waves...very very attractive ...and true
    8 Jan 2014, 09:10 AM Reply Like
  • alext1379
    , contributor
    Comments (707) | Send Message
     
    I can see the sell rating as taking profits and then buying back in later. The first expiry in Feb shouldn't affect share price that much. The second will have a bigger effect.

     

    However, how many banks and fund managers who missed out on the relatively lower price will buy in when more shares become available? In the short term, yes, it is a bubble and over valued. However, I'm not certain the floor will return to the $40 level again.

     

    With these crazy tech evaluations, a smaller loss than expected will send Twitter through the roof.

     

    I'm still trying to figure out what's with the crazy amount of calls at the end of Jan and Feb for $75 and up. So many theories, no answers.
    8 Jan 2014, 09:23 AM Reply Like
  • Tradevestor
    , contributor
    Comments (4081) | Send Message
     
    http://seekingalpha.co...

     

    Twitter's Lockup expiration. A comparison with FB and Friends.
    8 Jan 2014, 12:00 PM Reply Like
  • foodforthought
    , contributor
    Comments (223) | Send Message
     
    Expecting a ~7% (from today's intra-day low) dead cat bounce by Friday's close to shake up some of the "shorts with less conviction".

     

    Any thoughts?
    8 Jan 2014, 09:37 PM Reply Like
  • benitus
    , contributor
    Comments (2030) | Send Message
     
    It's anybody's guess which way TWTR will go in the short term but it will certainly go deep down in the mid-term or earlier. That doesn't mean we can't make money with the stock, so long as it doesn't stay stagnant (which it presently isn't). In fact, with the stock dropping and then moving up and down again this week has provided day-traders to make quite a bundle, who don't care whether the stock goes up or down, so long as it's moving. They may make bad calls and take some losses (which they recover quickly) but overall, the constant movement of the stock will enable them to make money, which is the fun and excitement of the game.
    9 Jan 2014, 05:54 AM Reply Like
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