Twitter is tanking as the downgrades come in

The stock fell 7% Friday after investors grow wary of its high valuation. Now, 19 of 26 analysts give it a 'hold' or 'sell' rating.

By MSN Money Partner Dec 27, 2013 3:00PM
Credit: © Richard Drew/AP
Caption: A Twitter logo an updated phone post is shown the floor of the New York Stock Exchange Monday, Nov. 4, 2013, in New YorkBy Steven Russolillo, The Wall Street Journal


Twitter's (TWTR) high-flying stock has gone too far, too fast.


That view comes courtesy of Macquarie Equities Research, which cut its rating on the microblogging site Friday morning to "underperform" from "neutral," while maintaining its $46 price target.


The catalyst for the firm's downgrade is simple: Twitter hasn't done anything to justify nearly tripling since last month's IPO.


"We believe nothing has changed the fundamentals to justify the sharp rise in shares over the past few weeks," Macquarie analyst Ben Schachter wrote to clients, while adding that the one-page research note may be "among the shortest downgrade notes you've ever read."


Shares dropped more than 7 percent Friday. The stock had risen five days in a row, gaining 76 percent this month and 182 percent since its IPO in early November.


Schachter notes the firm launched its coverage of Twitter on Dec. 11, when the stock was priced at $46. Since then, the stock jumped about 40 percent, compared to a 2 percent rally for the S&P 500, "on the back of virtually no news," he said.


"We continue to believe that Twitter as a company has a bright future and many opportunities ahead," Schachter says. "However, as a stock, we believe nothing has changed over the last 15 days to justify the rise in valuation."


Schachter also thinks he'll be the first of several analysts who'll act on Twitter's latest rally. Nineteen of the 26 Wall Street analysts that cover Twitter have the equivalent of "hold" or "sell" ratings on it, according to Thomson Reuters.


"Because of Twitter's run and rules around price targets, we expect many other analysts will quickly have to either justify raising targets (based on little new information) or downgrade," he says.


--Alexandra Scaggs contributed to this report.


More from The Wall Street Journal

Tags: TWTR
14Comments
Dec 27, 2013 5:36PM
avatar
"Twitter's () high-flying stock has gone too far, too fast."   Shades of dot.com companies in 1998-9.  A concept with no product.  B-o-r-I-n-g!
Dec 29, 2013 6:39PM
avatar

No enterprise!

No legitimate platform!

A time waster.

Social ineptness.

Its only virtue is for news and alerts but many other platforms provide tailored data to voice, email and text.

At least FB provides a portal for furthering public relations/discovery and staying connected.

But even FB can become a menace... "in moderation" is the prescription. 

Dec 29, 2013 11:07PM
avatar
Add's and marketing are huge, just look at the superbowl commercial cost per min.  The big money players know this and are now putting money in twitter. Social networks aren't going anywhere and Twitter isn't tanking. If you got some of this at $ 40 and you let it ride to $70, way to go because that is great. Let me give you a scenario, it's friday, it's the holliday season and you bought the hottest stock popin right now. what would you do? I'd take a little off the table and it's miller time, boys !!!!       TWITTER's not going anywhere, Some of you guy's are talking like it went under, are you crazy?       
Dec 27, 2013 7:24PM
avatar

Na - Na- Na - Na ---- Told you so !

Who buys stocks of companies that don't make money anyway?????

Dec 27, 2013 7:03PM
avatar
Crazy yes, 3-4 different Articles all about TWIT....If I had owned it, it would have been gone a few days back....arf, arf, arf...
Dec 27, 2013 5:05PM
avatar
These types of stocks can do this endlessly either way until the Markets go south. Then it's a straight shot down.
Dec 27, 2013 7:36PM
avatar
Just wait until it happens to FartBook and Google!
Dec 27, 2013 6:59PM
avatar

THAT KIND OF STINKS PATRIOT.....???


Believe that was the IPO price of TWTR @ $26....It was "way over" subscribed..

Think it opened @ $38 and change and has never seen $24 dollars since...

Unless you had some "very good" connections you never got it for $26...

I think you are a Liar, plain and simple...


I had a chance to buy, didn't and probably would not have got the IPO anyway..

No NTU...There were NO MARKET MAKERS selling for $24 bucks or near that.

Dec 29, 2013 1:16AM
avatar
For those of you that hate the United States of America so much, then leave.

Go buy an island, make the rules and laws, develop your new country's currency and start your own printing presses. You can hail to yourself in front of a mirror every morning as the new President/King/Queen​/Dictator/God or whatever you want to call yourself as the ruler of your nation. Congratulations!

Go do it now and stop whining!
Dec 27, 2013 3:59PM
avatar
I bought 500 shares @24   no where near my Stop-Sell
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

124
124 rated 1
267
267 rated 2
467
467 rated 3
605
605 rated 4
645
645 rated 5
691
691 rated 6
617
617 rated 7
459
459 rated 8
313
313 rated 9
130
130 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
AAPLAPPLE Inc10
ATVIACTIVISION BLIZZARD Inc10
BIDUBAIDU Inc10
BXTHE BLACKSTONE GROUP L.P10
CELGCELGENE CORP10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.