Seeking Alpha

Four downgrades for Twitter; unfavorable Facebook comparisons made

  • Twitter (TWTR -18.7%) analysts, already more bearish than bullish going into the company's Q4 report, have become even moreso afterwards, as worries about Timeline views and MAU growth fully overshadow improving ad monetization. UBS, Sterne Agee, and Atlantic Equities have moved from neutral to bearish ratings, and Stifel from Buy to Hold.
  • Susquehanna (Market Perform, PT cut to $48 from $55) thinks Twitter's MAU growth (9M Q/Q) missed consensus by 8M. The firm also notes Facebook added 63M MAUs in a quarter when it was Twitter's size (in Q3 '09), and added 4x as many as Twitter in Q4. Likewise, LinkedIn (nearly the same size as Twitter) added 21M users in Q3.
  • UBS observes Twitter still traded at 30x 2014E EV/sales (vs. 13x for Facebook) even after yesterday evening's selloff, and predicts efforts to improve engagement/user growth will require higher R&D spend.
  • Deutsche (Buy, PT increased to $65 from $50) remains optimistic about Twitter's ability to eventually achieve Facebook-like scale, but thinks "bears win near-term" and admits Twitter's user growth/engagement challenge is tougher than the monetization challenge Facebook dealt with following its IPO.
  • More on Twitter's earnings. CC transcript.
Comments (20)
  • benitus
    , contributor
    Comments (1898) | Send Message
     
    It's about time that some analysts speak the truth about TWTR, instead of all the hype that we've been getting for the past month or so, which sickened me to think that many people are being led to their doom with such over-hyped forecasts or wishful thinking. Sure would like to see them eat their words.
    6 Feb, 10:56 AM Reply Like
  • michael5705
    , contributor
    Comments (2) | Send Message
     
    This is why you need to excercise care when reading report from analysts.
    6 Feb, 02:10 PM Reply Like
  • benitus
    , contributor
    Comments (1898) | Send Message
     
    Michael....I never care too much about the opinions of so-called analysts working for big banks or hedge funds. I'm only interested in their figures and charts. Unfortunately, lots of individual players, including those who work for corporations or mutual funds, etc. tend to be swayed by such reports, especially those which tout bullish sentiment, because everyone thinks that money can only be made from a bull market. In truth, I make more money from bearish outlooks, as I'm very familiar with how humans respond to changing circumstances. Good luck as always to your trades.
    6 Feb, 02:34 PM Reply Like
  • Moon Kil Woong
    , contributor
    Comments (11011) | Send Message
     
    It's silly to bash Twitter's overpriced stock price without bashing the whole social media bubble. Twitter is no more overpriced than Facebook. The only major difference is that Facebook will be reaching saturation very soon on how much garbage they can squeeze out (personal monetizable data) and pump in (advertisements) of their cow-like members. Twitter on the other hand is having a hard time exploiting their users.
    7 Feb, 01:57 AM Reply Like
  • Newbie trader
    , contributor
    Comments (171) | Send Message
     
    I say buy now. This is Twitter, not some service that no one uses. I bought at 52.14 and I want to buy more. XD
    6 Feb, 11:04 AM Reply Like
  • benitus
    , contributor
    Comments (1898) | Send Message
     
    Newbie....you'll be sadly disappointed when it goes below $50 because there won't be any turning back. You're a brave soul. Guess you must have money to throw. For God's sake, this is not a stock that you want to stock up as it goes down because the truth has come out and the bubble has burst. Capital should be used to make money, period.
    6 Feb, 11:30 AM Reply Like
  • Newbie trader
    , contributor
    Comments (171) | Send Message
     
    Thanks for your concern. Good luck to the both of us. XD
    6 Feb, 11:37 AM Reply Like
  • tstreet
    , contributor
    Comments (560) | Send Message
     
    Yes, it is a service that a lot of people use but the number of users is not increasing enough to give anyone confidence that it can achieve revenue and earnings to justify even close to its current price. They also need to do a better job monetizing the users that it does have. I personally like TWTR and use it a lot but in this case I am not going to be buying what I know. Also, their conference call just made things worse as they do not seem to know how to turn this around.

     

    Yes, it was obviously possible to make money on this stock between its IPO and leading up to the earnings call because people were willing to play the high expectations game. At that point, you could believe anything you wanted. I did in fact buy the stock on the day of its ipo and made a decent profit well before the conference call. But now we have the numbers and the lack of active user growth is a killer.

     

    Newbie, you could get lucky but you might seriously consider getting out now.
    6 Feb, 02:44 PM Reply Like
  • Joseph Poma
    , contributor
    Comments (437) | Send Message
     
    LOL! "Not some service that no one uses..." I'm sorry did you see the DECLINE in timeline views? Keep buying, I'll be the one selling it to ya!
    6 Feb, 02:45 PM Reply Like
  • Newbie trader
    , contributor
    Comments (171) | Send Message
     
    Thanks. I am putting a stop loss in. It just dropped more than 20% so I am not leaving just yet. I am taking all your warnings seriously but there is just too much to gain from here. Good luck to all and thank you. XD
    6 Feb, 03:01 PM Reply Like
  • tomlos
    , contributor
    Comments (1097) | Send Message
     
    Amazes me that anyone would buy TWTR as a long term investment... good luck to you my friend, you're likely going to be needing it and you must have an iron stomach.
    6 Feb, 06:46 PM Reply Like
  • Newbie trader
    , contributor
    Comments (171) | Send Message
     
    OUT at 53.30! 2% gain. Well, I was sweating bullets. XD
    I'm glad it turned out alright and wouldn't you know it? right after I sold, it's now 53.85. 8% gain...
    well...profit is profit. Good luck all and thanks for all your concerns. Much appreciated. XD
    7 Feb, 01:46 PM Reply Like
  • benitus
    , contributor
    Comments (1898) | Send Message
     
    Newbie....never regret your decision because the situation could've gone the other way. Once you've closed out your trade (and made a profit), it's a new beginning. You could also short it as it goes higher and then, cover when it comes back down, which is also very profitable, as you can always reverse your positions and go long again if you cover low enough.
    7 Feb, 03:45 PM Reply Like
  • sa_member_756157
    , contributor
    Comments (1368) | Send Message
     
    Only a name. Compare the price and income stats with those of other companies with stock trading in similar range. Does Twitter stack up?

     

    Twitter has a serious problem. Compare user numbers with those of FB, LInkedIn or other social media. They made their latest income numbers during time when numbers were rising, but they seem to be falling now. Same as with Facebook.
    6 Feb, 11:16 AM Reply Like
  • Newbie trader
    , contributor
    Comments (171) | Send Message
     
    OMG! Don't be a buzzkill. XD
    6 Feb, 11:28 AM Reply Like
  • june1234
    , contributor
    Comments (2490) | Send Message
     
    Good to see analyst community on top of this one post earnings. Knew those ivy league degrees pay for themselves. Price of Twitter like AMZN and NFLX has very little to do x and o's; don't need em when you have 200M users like Twitter does, easy sale. The same analysts will probably upgrade it after its done its swan dive, same game they play with Apple
    6 Feb, 12:48 PM Reply Like
  • michael5705
    , contributor
    Comments (2) | Send Message
     
    This is a company which is still bleeding. I would rather stay away from it.
    6 Feb, 02:10 PM Reply Like
  • psychological-dividends
    , contributor
    Comments (544) | Send Message
     
    #nousershelpus
    6 Feb, 07:07 PM Reply Like
  • svmoney
    , contributor
    Comment (1) | Send Message
     
    also, many insiders will be able to sell their employee stock options towards the end of Feb so there will be more shares on the mkt... to go down
    7 Feb, 12:55 AM Reply Like
  • monfrere
    , contributor
    Comments (580) | Send Message
     
    I find it interesting that so many social media stocks can have such high valuations relative to revenue at the same time. Are these all different people betting on different companies or do we think that advertising dollars are going to rise 20x in the next few years and ALL the high valuations can be supported?
    7 Feb, 04:21 PM Reply Like
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