Financial Trading Blog
Stock of the day 21/04/2016 – Twitter Inc
Having wrapped up 2015 at effective all-time lows, Twitter kicked off 2016 in a typically inauspicious style as reports that the company was set to switch to 10000-character tweets caused the stock to plunge below the $20 mark by the end of the first week of January. Matters were made worse as January continued, a worldwide outage on both its web and mobile sites helping the stock fall a further 7% to leave it hovering around the $16 mark for the rest of the month.
(Source: IT-Finance.com 21/04/2016)
If January was bad then February was even worse; in the final three months of 2015 Twitter revealed that it had actually seen a decline in users for the first time in its history (when SMS Faster Followers are stripped out), slipping from 307 million to 305 million across the globe. Despite claiming that those lost users ‘were not high quality’ CEO Jack Dorsey couldn’t calm investors’ fears, the stock at one point plunging to an all-time low of $12.85, a startling decline from the $70 peak hit in the company’s first few months as a public company.
Since then Twitter’s price has stabilised somewhat. Crawling back form that mid-February nadir the company managed to briefly reach $20 at the start of March, only to settle between $16 and $17.50 for the past month and a half. Twitter sits at a current trading price of $17.43 (IT-Finance.com, 21/04/2016).
In terms of Twitter’s first quarter results, from a revenue perspective things look ok for the company, analysts expecting a 39.4% year-on-year increase to $608 million with a 43% jump in its non-GAAP EPS to $0.10. However, the pressure is on Dorsey and co. to at the very least reverse the user-slip seen at the end of 2015, and if the company can’t manage any monthly user growth then its surge in revenue will likely be for nought in the eyes of its investors.
Twitter Inc has a consensus rating of ‘Hold’ with an average target price of $26.32.
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