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Twitter, Facebook Stock Dropped in July amid User Growth Concerns

Adam Rogers - Author
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Aug. 18 2020, Updated 5:17 a.m. ET

Twitter stock fell over 27% in July

The stock prices of social media companies Twitter (TWTR) and Facebook (FB) took a pounding last month after they released their second-quarter results. Twitter stock fell 27.0% in July to close at $31.87. At the end of July, Twitter stock was trading 103.0% above its 52-week low of $15.67 and 33.0% below its 52-week high of $47.79.

Twitter stock has returned 98.0% in the trailing 12 months and 27.0% in 2018 after rising ~47.0% in 2017.

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Comparatively, Facebook (FB) stock fell 11.0% in July and has declined ~20.0% in the last five trading days of July to close at $172.58. At the end of July, Facebook was trading 16.0% above its 52-week low of $149.02 and 21.0% below its 52-week high of $218.62. Facebook stock has returned 2.0% in the trailing 12 months and -2.7% in 2018 after rising ~53.0% in 2017.

Twitter reported its second-quarter earnings on July 27, and Facebook reported its second-quarter results on July 25. In both cases, investors were dissatisfied despite significant revenue growth for both firms.

Twitter’s revenues rose 24.0% YoY (year-over-year) to $711.0 million. However, analysts were disappointed with Twitter’s guidance for the third quarter, which indicated a decline in the forecast for the number of monthly users.

Comparatively, Facebook’s second-quarter revenues rose 42.0% YoY to $13.23 billion. The company’s DAU (daily active users) totaled 1.47 billion and below the estimated 1.49 billion DAU figure. Facebook might still be grappling with the fallout from data leaks and fake news issues after the Cambridge Analytica data scandal.

Upside potential for Facebook and Twitter?

Does the recent price correction provide upside potential for investors? Of the 48 analysts tracking Facebook, 42 gave “buy” recommendations, four gave “hold” recommendations, and two gave “sell” recommendations. The average target price for Facebook is $212.30 with a median target of $205.00, which indicates that Facebook is trading at a discount of 19.0% to analysts’ price target estimates.

Of the 39 analysts tracking Twitter, nine gave “buy” recommendation, 22 gave “hold” recommendations, and eight gave “sell” recommendations. The average target price for Twitter is $34.30 with a median target of $32.50, which indicates that Twitter is trading at a discount of 2.0% to analysts’ price target estimates.

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