Twitter gets 'buy' rating even before listing

Mon Oct 7, 2013 7:27pm EDT
 
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By Chandni Doulatramani

(Reuters) - Twitter Inc's share price could almost double in its first year as a listed company, a brokerage firm said, issuing a "buy" rating on the stock even before the online messaging service goes public.

SunTrust Robinson Humphrey analyst Robert Peck, the first to rate the stock, suggested Twitter could float at $28-$30 per share, and said it could reach $50 within a year.

Twitter allows its users to post a maximum of 140 character messages called "tweets" to share their personal thoughts and links to content with the public and their friends, or to promote businesses.

"It is important for investors to look at Twitter beyond just a 140 character text," Peck wrote in a 76-page note.

Twitter's planned IPO is one of the most anticipated since Facebook Inc's coming-out party in June 2012. Despite posting big losses over the last three years, Twitter hopes to woo investors with its advertisement revenue growth.

The company, which started selling advertising only in 2010, received about 87 percent of its revenue from advertising in the first half of the year.

Twitter's September acquisition of online mobile-ad exchange MoPub, which is viewed as its answer to Google Inc's DoubleClick, and its advertising alliances with broadcasters would boost advertising revenue, the brokerage said.

Peck said one of the biggest opportunities for Twitter was to capture a part of the $200 billion global TV market with Amplify, which allows broadcasters to show video clips and ads through tweets coordinated with what is being shown on TV.   Continued...

 
The Twitter logo is shown at the company's headquarters in San Francisco, California October 4, 2013. REUTERS/Robert Galbraith