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.