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Why Twitter Divides Wall Street Analysts

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Wall Street sentiment ahead of Twitter’s 2Q17

Twitter’s (TWTR) surprisingly strong performance in 1Q17 triggered several positive analyst comments on the stock. However, a closer look reveals that general Wall Street sentiment toward the stock has remained largely the same since the last earnings update.

On average, Wall Street rates Twitter as “neutral,” a result of 30 “neutral” ratings, seven “but” ratings, and seven “sell” ratings. The stock had a similar rating quality going into 1Q17.

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Some analysts say Twitter stock could hit $125.00

Twitter’s stock price prospects also don’t unite analysts. The average price target on the stock is $18.85. The most bearish analyst has a price target of $10.00 on Twitter while the most bullish analyst has a price target of $125.00 on the stock.

Twitter went public at $26.00 per share, and the stock soared to above $70 shortly after that. But as of July 6, the stock was trading at $17.82.

Questioning the sustainability of Twitter’s gains

Twitter is a divisive stock among analysts largely because of its inconsistent growth. While a few analysts upgraded their ratings on the stock following better-than-expected 1Q17 performance, many questioned the sustainability of the gains.

Twitter’s growth depends on how it attracts and retains subscribers and advertisers, yet the many options in the social networking space pose a challenge to user and advertiser retention. In addition to social media rivals, such as Facebook (FB), Snap (SNAP), and Alphabet’s (GOOGL) Google, Twitter is also vying against e-commerce operators such as Amazon (AMZN) and Groupon (GRPN) for the attention of digital advertisers.

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