At the current share price of around $65 a share, Twitter’s market cap is just less than a quarter of rival Facebook Inc. (NASDAQ: FB). But since Facebook’s beat of fourth-quarter expectations, Twitter’s stock price appreciation has actually outpaced Facebook’s, rising by around 15%, compared with Facebook’s jump of about 12%. Before Facebook reported earnings last week, Twitter stock was barely flat for the month of January.
And there has also been significant analyst action on Twitter in January. The company was started at Buy by Stifel Nicolaus on January 16, and three days earlier its price target was raised to $65 from $46 at Goldman Sachs. Other than that, many analysts have been very cautious in January, based on such high revenue multiples. Nomura gave it a new Neutral rating in January, while Cowen and Company gave Twitter a new Underperform rating. Right after the start of the year, we saw key analyst downgrades from Cantor Fitzgerald and Morgan Stanley.
The consensus price target on Twitter stock from Thomson/First Call is $48.70, and the forward earnings multiple is astronomical, since Twitter has yet to post a profit.
Without Facebook’s big earnings report last week, it is probably fair to say that Twitter stock would be trading at about 7% below where it is trading today. Should Twitter fail to meet estimates on Wednesday, company management could have a lot of explaining to do.
Twitter stock was trading at around $65.50 on Monday, in a 52-week range of $38.80 to $74.73.
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