Pressure on Twitter CEO Jack Dorsey rose as Twitter shares plunged to their lowest level yet, weighed down by Wall Street's faltering confidence in the turnaround led by the company's co-founder.
Shares (TWTR) closed down 5% to $18.68 on Wednesday after analysts heaped more doubt on Twitter's prospects.
Morgan Stanley analyst Brian Nowak cut estimates, reiterated a "sell" rating and reduced his target price to $18 from $22. Mizuho U.S. Equity Research analyst Neil Doshi started coverage with a "neutral" rating and a $21 price target. And RBC Capital Markets analyst Mark Mahaney predicted that Twitter, which has struggled with stagnant user growth, would actually see monthly active users decline in 2016.
Twitter stock is down nearly 30% since the San Francisco social media company went public two years ago. Twitter shares, which began trading at $26 in November 2013, fell below their initial public offering price last August amid rising alarm over stagnant user growth.
A late-day selloff on Wednesday pushed the Dow down 365 points and shaved 3.4% off of the Nasdaq. And Twitter is not the only tech company getting hammered. Netflix shares lost nearly 9% Wednesday, while Amazon fell nearly 6%.
S&P Capital IQ analyst Scott Kessler says Twitter is being hit by a combination of investors losing confidence in its business and losing confidence in the sector.
"The market has been down, down, down for a lot of stuff," Kessler said. "Twitter is no exception."
Twitter has lost about half its value since Dorsey, tasked with reversing the company's fortunes, became CEO on July 1.
Under Dorsey, Twitter has rolled out new initiatives to reignite the service, including a new "Moments" feature. Twitter is also considering lifting its iconic 140-character limit. Yet the initiatives have not stemmed slowing growth, and some doubt he can successfully act as CEO of two publicly traded companies: Twitter and payments provider Square (SQ).
"We admire Mr. Dorsey and view him as a visionary among the Internet executives and founders, but running two public companies in two fiercely competitive markets is a Herculean task," Doshi wrote in a research report.
Twitter is a "unique online asset with has the pulse on real-time data," but competition for ad dollars is intensifying, and Twitter has struggled with product execution, the analyst noted. "For us to get more constructive on the stock, we need to see sustained user growth, better product execution, and margin improvement," Doshi wrote.
What's more, Twitter's ranking among social media services is deteriorating, according to a Mizuho survey.
In June 2015, the brokerage's 1,000-plus person survey of U.S. mobile users indicated that Twitter was the third-most popular social app, said Doshi. By November, Twitter declined in the rankings, coming in behind others that included Facebook, Instagram, LinkedIn, and Pinterest. "And this was five weeks after Twitter's Moments product launched," Doshi wrote.
Morgan Stanley's Nowak also noted falling usage in the fourth quarter despite a national television campaign and a push to promote the "Moments" feature.
In the September quarter, Twitter's monthly active users in the U.S. grew 3% year over year. RBC's Mahaney said those numbers may not get any better and, in fact, may decline.
"The market assumes that given the company’s product innovations and marketing efforts that eventually the (monthly active users) will grow again. But we believe there’s a reasonable possibility that they won’t – that the product and marketing efforts will take a long time to have an impact and in the end may still not be able to broaden the appeal of Twitter," Mahaney wrote in a research report.
Source : USATODAY
Shares (TWTR) closed down 5% to $18.68 on Wednesday after analysts heaped more doubt on Twitter's prospects.
Morgan Stanley analyst Brian Nowak cut estimates, reiterated a "sell" rating and reduced his target price to $18 from $22. Mizuho U.S. Equity Research analyst Neil Doshi started coverage with a "neutral" rating and a $21 price target. And RBC Capital Markets analyst Mark Mahaney predicted that Twitter, which has struggled with stagnant user growth, would actually see monthly active users decline in 2016.
Twitter stock is down nearly 30% since the San Francisco social media company went public two years ago. Twitter shares, which began trading at $26 in November 2013, fell below their initial public offering price last August amid rising alarm over stagnant user growth.
A late-day selloff on Wednesday pushed the Dow down 365 points and shaved 3.4% off of the Nasdaq. And Twitter is not the only tech company getting hammered. Netflix shares lost nearly 9% Wednesday, while Amazon fell nearly 6%.
S&P Capital IQ analyst Scott Kessler says Twitter is being hit by a combination of investors losing confidence in its business and losing confidence in the sector.
"The market has been down, down, down for a lot of stuff," Kessler said. "Twitter is no exception."
Twitter has lost about half its value since Dorsey, tasked with reversing the company's fortunes, became CEO on July 1.
Under Dorsey, Twitter has rolled out new initiatives to reignite the service, including a new "Moments" feature. Twitter is also considering lifting its iconic 140-character limit. Yet the initiatives have not stemmed slowing growth, and some doubt he can successfully act as CEO of two publicly traded companies: Twitter and payments provider Square (SQ).
"We admire Mr. Dorsey and view him as a visionary among the Internet executives and founders, but running two public companies in two fiercely competitive markets is a Herculean task," Doshi wrote in a research report.
Twitter is a "unique online asset with has the pulse on real-time data," but competition for ad dollars is intensifying, and Twitter has struggled with product execution, the analyst noted. "For us to get more constructive on the stock, we need to see sustained user growth, better product execution, and margin improvement," Doshi wrote.
What's more, Twitter's ranking among social media services is deteriorating, according to a Mizuho survey.
In June 2015, the brokerage's 1,000-plus person survey of U.S. mobile users indicated that Twitter was the third-most popular social app, said Doshi. By November, Twitter declined in the rankings, coming in behind others that included Facebook, Instagram, LinkedIn, and Pinterest. "And this was five weeks after Twitter's Moments product launched," Doshi wrote.
Morgan Stanley's Nowak also noted falling usage in the fourth quarter despite a national television campaign and a push to promote the "Moments" feature.
In the September quarter, Twitter's monthly active users in the U.S. grew 3% year over year. RBC's Mahaney said those numbers may not get any better and, in fact, may decline.
"The market assumes that given the company’s product innovations and marketing efforts that eventually the (monthly active users) will grow again. But we believe there’s a reasonable possibility that they won’t – that the product and marketing efforts will take a long time to have an impact and in the end may still not be able to broaden the appeal of Twitter," Mahaney wrote in a research report.
Source : USATODAY
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