Twitter lower; Cowen survey suggests ad ROI below Facebook, LinkedIn

Cowen's John Blackledge is the latest analyst to issue a bearish opinion on Twitter (TWTR -4.9%), starting coverage with an Underperform and $32 PT. After opening higher, shares are adding to their recent losses, and are now down 17% on the week.

Blackledge (unsurprisingly) takes aim at Twitter's valuation, and also reports a survey of 50 ad buyers suggests Twitter's ad ROI is worse than Facebook (FB -1.7%) and LinkedIn's (LNKD +2.3%). ~60% of respondents claimed Facebook delivered the best ad ROI, ~25% said LinkedIn did so, and only ~5% picked Twitter.

RBC offered a more upbeat take last month, stating 40% of polled Twitter advertisers have seen improved ROIs over the prior six months, and that a similar number have increased their Twitter spend.

Much like Facebook in 2012/early 2013, Twitter has been busy rolling out a barrage of new ad products, as it works to provide better targeting and improve its ad revenue per 1K timeline views from a Q3 level of just $0.97 ($2.58 in the U.S., $0.36 internationally).

Cantor and Morgan Stanley have already cut shares to Sell this week, with each naming valuation among its reasons for being bearish.

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Comments (12)
  • Archman Investor
    , contributor
    Comments (3383) | Send Message
    Of course Twitter is lower.
    If one spends some time (as I have) looking around on Twitter and watching what is posted it is easy to see why this stock is worth less then $10 / share.


    Between the:
    News organizations, websites, all putting out tweets about the same news story (over and over)
    New stories repeated over and over that are over 48 hours old
    People trying to get you to join MLM networking schemes
    Bloggers trying to get you to join their websites as they pretend they are "experts" on the latest trend, financial advice, etc. (I have never seen so many average Americans advertising themselves as budget experts..LOL. To bad 99.9% of it is common sense)
    Or just plain idiotic thoughts about useless info.
    9 Jan 2014, 02:00 PM Reply Like
  • Yesterdays_news
    , contributor
    Comments (2171) | Send Message
    A lot of new Twitter-like apps are going to kill Twitter. Apps like Whatsapp and Jelly are where all the trendy young hipsters are running to. Facebook is still fairly stable and safe.
    I am betting that someone will make a play for Whatsapp and Jelly in the next few months.
    9 Jan 2014, 02:21 PM Reply Like
  • Kamil Kolacek
    , contributor
    Comments (1109) | Send Message
    Yeah, probably Twitter will make that play!
    9 Jan 2014, 02:24 PM Reply Like
  • Alpha_Vega
    , contributor
    Comments (39) | Send Message
    Agreed, $TWTR with 500M subscribed base and 250M+ active global base is best positioned to dominate market.
    10 Jan 2014, 01:36 PM Reply Like
  • alext1379
    , contributor
    Comments (811) | Send Message
    I find it odd that at $26, everyone was scrambling to jump in, most missing the boat and content at a $45 valuation and thinking its the next big thing. Now that it's trippled in value, suddenly nobody wants to touch it and feel its a failed business proposition.


    As long as the options are commanding a premium, then just sell calls in the morning, close them for virtually nothing at the end of the day and repeat. Normally you can make money but in my case, I'm covering most of my losses.
    9 Jan 2014, 02:54 PM Reply Like
  • benitus
    , contributor
    Comments (3473) | Send Message
    Don't lose your nerve, alex....even if you've incurred substantial losses. It's not difficult to cover your losses as long as it continues to bop up and down, and not straight down. Just be vigilant and make some bold decisions, until you're back to making profit again.
    10 Jan 2014, 10:26 AM Reply Like
  • Mark Krieger
    , contributor
    Comments (6612) | Send Message
    shorts should not get greedy...think about covering in the low $50's. After all, how low can the shares possibly go?
    9 Jan 2014, 03:34 PM Reply Like
  • th3decider
    , contributor
    Comments (481) | Send Message
    They could go to zero like the valuation of a lot of companies that continually lose money do.
    9 Jan 2014, 04:14 PM Reply Like
  • benitus
    , contributor
    Comments (3473) | Send Message
    You'll be surprised at how low TWTR can go, since it's only a bubble stock, with hardly any significant revenue prospects, which is currently being played by all kinds of traders (or gamblers), speculators and the like. Honest investors jumping into this stock will end up feeding these people (or vultures) and padding their pockets. Right now, it's being traded down daily for this entire week, so I think it'll go below $50 next week, which depends largely on the volume being traded. The thinner the volume, the lower it'll go, unless something else happens between now and then, which is again anybody's guess. If you want my suggestion, test the waters and short it on the rebound (at least $2), so that you can cover and make some profit when the slide resumes. Have a great weekend.
    10 Jan 2014, 10:19 AM Reply Like
  • hyeduk
    , contributor
    Comments (138) | Send Message
    Mark, it's all a big game. They knew in the begging where it was going. They upgrade the stock and two weeks later they downgrade it. Really? WS lowers the value of $TWTR on purpose before the QE. The stock will bounce back in couple weeks. Just watch.
    10 Jan 2014, 11:03 AM Reply Like
  • paulmichael
    , contributor
    Comments (149) | Send Message
    Elliott wave analysis predicts massive move up from here...
    10 Jan 2014, 11:33 AM Reply Like
  • Durwood Dugger
    , contributor
    Comments (509) | Send Message
    How many of you used any SM to make a purchase? Likely none of you have used a Twitter, or FB or any other SM as a tangible ingredient for purchasing - because there is none. Therein lies the problem advertisers have with SM. Brand recognition is an intangible that only goes so far in purchase decisions, and in most cases price point competition for similar values wins out. Advertisers aren't the most intellectually gifted group, but eventually they'll figure out that SM is an advertising assist at best and value it accordingly.
    10 Jan 2014, 12:13 PM Reply Like
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