Daily Management Review

Analysts do not believe in Twitter's future


The past year was extremely unfortunate for Twitter. All events happened with the company were enough for analysts to feel that the micro blogging resource "has had it." Twitter has no future, so shares of the company are expected fall from current $ 16-17 per security to less than $ 10 per share, says Trip Chowdhry, CEO of Global Equities Research at Uber-Bear report. The bad score is primarily associated with departure of senior managers, as well as poor financial performance, according to CNBC.

Twitter’s shares fell more than 23% since the beginning of the year, and a month of trading on the New York Stock Exchange brought nothing but 8%-fall. Chowdhry said that quality of the data is poor, it results in poor targeting and, as a consequence, advertisers are leaving the platform.

The analyst pointed out that sociologists have used Twitter’s data to predict outcome of the US presidential election on November 8th. As we all know, Donald Trump won unexpectedly, while statistics had prophesized victory of Hillary Clinton. One reason for such a result, according to experts, is a large number of bots to social networks. 

Global Equities Research gave one of the most negative forecasts about Twitter’s future, says CNBC. 25 analyst firms recommend to hold stocks of the social networks, eight - recommend selling. Eight companies, by contrast, recommend buying Twitter’s shares.

During the last reporting quarter, Twitter reported a slowdown in revenue growth. The company is going to lay off 9% of employees in order to reduce costs. Twitter's revenue increased by 8.2% to $ 615.9 million, while analysts had forecasted $ 605.8 million. The company increased its revenues by 20% in the previous quarter and by 58% in the last year.

Adjusted profit of the company in July-September amounted to $ 0.13 per share, compared with $ 10 per share a year earlier, while analysts polled by Reuters had forecasted $ 0.09 per share. Twitter’s net loss in July-September amounted to $ 102.9 million, or $ 0.15 per share, compared with a loss of $ 132 million, or $ 0.20 per share, in the same period last year.

Twitter's management tried to rectify the situation by selling the company. Among the potential buyers were listed Microsoft, Google, Apple and Disney, but they all eventually abandoned the idea. The companies-applicants consulted with banks on feasibility of acquiring the social network, and representatives of financial institutions advised not to buy Twitter.

After media reported that Walt Disney and Google were not interested in the transaction, Twitter’s shares fell more than 18% during premarket trading on NASDAQ stock exchange. Analysts at Northman Trader then assumed that in the event of complete loss of potential buyers for the transaction, Twitter’s share price could fall to $ 14-19 per share.

Salesforce was the only major player left in the fight to purchase Twitter, but soon the bidder refused to buy the service. Twitter Inc.’s shares then fell by nearly 6%, dropping the company's market capitalization to $ 11.6 billion. Thus, in comparison with December 2013, when Twitter’s value reached its highest value at $ 53 billion, the microblogging service has fallen by more than 4.5 times.

source: cnbc.com