Investors dump Twitter stock as results divide Wall Street

Thu Feb 6, 2014 10:17am EST
 
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By Saqib Iqbal Ahmed

(Reuters) - Twitter Inc's shares fell almost 25 percent on Thursday, wiping out about $9.8 billion in market value, after the company reported a sharp slowdown in user growth.

The stock, which debuted at $26 in November, hit a low of $50 in early trading. The shares hit a peak of $74.73 in late December as investors bet that the social media platform could become as ubiquitous as Facebook.

Analysts, unlike investors, were divided on the company's outlook a day after it reported fourth-quarter results.

Twitter, according to broker assessments, is either the overvalued owner of a niche product whose potential is fading or an undervalued phenomenon that is set to give Facebook a run for its money in mobile.

"We remain firmly in the latter camp..." said Deutsche Bank, one of one at least six brokerages that raised target prices or ratings on Twitter's stock.

Deutsche, in a note entitled "Great Quarter, Aside From The Most Important Metric", said it was impressed by Twitter's improving monetization and expected slowing user growth to reverse during 2014.

The broker, which sees Twitter on its way to 1 billion user, maintained a "buy" rating on the stock and raised its price target to $65 from $50.

Facebook has about 1.2 billion users.   Continued...

 
A sign displays the Twitter logo on the front of the New York Stock Exchange ahead of the company's IPO in New York, November 7, 2013. REUTERS/Lucas Jackson