In out-of-market trading this morning April 29, shares in the micro-blogging company were actually trading up, though leaked numbers from the report caused a massive drop in value before the market got a chance to close, and the company got a chance to report officially yesterday afternoon.
Analysts try to figure out Twitter performance
Jefferies US Internet Team was optimistic in their assessment of the struggles Twitter faced in the first quarter of the year. According to a report released this morning the team of analysts reckons that yesterday’s misses won’t truly affect Twitter in the long term.
The real issue for them is whether the company’s product improvement will continue over the coming months and years. The drop in value does affect the medium term, however, and Jeffries dropped its price target on Twitter shares from $65 to $60.
Tony Wible of Janney Capital had a more negative view of the company’s performance. He downgraded Twitter stock and said that the first sequential revenue decline could be an important market for Twitter going forward. He put a price target of $44 on the company’s stock, and pointed out that ad engagement was disappointing in the quarter.
Looming competitive threats and growing product uncertainty added to the pressure of the Twitter downgrade, according to Mr. Wible of Janney Capital. Wible downgraded Twitter stock from Buy to Neutral on the back of the report.
Brian Wieser of Pivotal Research took an opposing view and upgraded the company’s shares from Hold to Buy. The major factor for Weisser was, of course, the massive decline in the company’s share price. That makes today a buying opportunity for investors looking to expose themselves to the high growth internet sector.
The analyst said “Twitter’s long-term potential as a differentiated niche offering in digital advertising is mostly unchanged” and put a price target of $50 on the company’s stock.
Twitter continues to perplex
Daniel Salmon at BMO Capital embodies the confusion of his profession and described the tension in valuing Twitter in his report on the company. Salmon said that the “revenue shortfall juxtaposed against the positive ad product and user experience improvement” was the case of increased difficulty in valuing Twitter.
Twitter is a difficult company, and at this point in its history the company could go any way. Some analysts think that revenue in the first three months of the year isn’t that meaningful for the firm’s outlook, others think it points to a future in which Twitter may not be able to compete properly.
Daniel Salmon is happy enough to remain on the sidelines and let the story play out a little before picking a side. Salmon says “The challenge remains conviction in execution on this opportunity and aligning with a clean user growth story.”