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Why Did Twitter Stock Fall Last Week?

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Twitter fell 11.4% last week

This series looks at the top movers in the technology sector last week. Twitter (TWTR) stock fell 11.4% in the week ended December 23, 2016. The stock fell 4.7% on December 21, 2016, after it reported that two senior executives had left the firm. Chief technology officer Adam Messinger and product vice president Josh McFarland were the two employees who resigned last week.

While Messinger stated that he is taking some time off from work, McFarlan will be joining a venture capital firm. Last month, chief operating officer Adam Bain also decided to leave the firm. It remains to be seen how the market views the departures of these top level executives in one quarter.

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Twitter reports bug in Android app

On December 23, 2016, Twitter released an official statement that a bug in the Twitter Android (GOOG) (GOOGL) application inflated video advertising metrics. A Twitter spokesperson confirmed the news to Business Insider: “We recently discovered a technical error due to a Twitter product update to Android clients that affected some video ad campaigns from November 7 to December 12. Once we discovered the issue, we resolved it and communicated the impact to affected partners. Given this was a technical error, not a policy or definition issue, we are confident it has been resolved.”

Twitter’s stock price movement in the last month has been -9.4%. Year-to-date, the company’s stock price has fallen 28.7%, and year-over-year, it’s fallen 27.2%. On December 23, 2016, Twitter was trading at $16.5. Peers Amazon (AMZN) and Facebook (FB) have generated returns of 0.4% and -2.2%, respectively, in the trailing-five-day period.

Twitter’s negative stock price performance in 2016 could be a result of the company’s failed attempts to sell itself. Several companies like Alphabet (GOOG), Salesforce (CRM), and The Walt Disney Company (DIS) have all appeared to show interest in acquiring Twitter before walking away.

Of the 39 analysts covering Twitter, six have given it “buy” recommendations, eight have given it “sell” recommendations, and 25 have given it “hold” recommendations. Analysts’ stock price target for the company is $17.02, and its median target price is $17.00, which indicates that Twitter is trading at a discount of 3% to median analyst estimates.

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