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Why Twitter Stock Plunged on June 13

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Jun. 16 2019, Updated 2:57 a.m. ET

Twitter stock fell after MoffettNathanson lowered its price target

Twitter (TWTR) stock fell 3% on June 13 after MoffettNathanson analyst Michael Nathanson reiterated his “sell” rating on the stock. The analyst lowered his price target from $28 to $25. Twitter is currently trading at $36.2 per share.

Nathanson cited an elevated valuation on the stock after it rose 31.9% year-to-date as of June 12. Investors have taken a liking to the stock now that the company has been posting profits on a consistent basis for the last two years. The company’s growth is slowing, however, as its monthly user base has plateaued. Nathanson said that his long-term outlook for the company in the US isn’t good, as its user base may be maturing.

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Twitter looks slightly expensive

However, the company, which now only reports mDAUs (monetizable daily active user), is still reporting decent growth in its mDAUs, which is a sign that people are spending more time on the platform. Twitter has been working hard to weed bad actors out of its platform, which is a positive step, as advertisers don’t want their ads showing up next to negative content.

Twitter stock is trading at 8.8x its trailing-12-month sales, which seems slightly stretched compared to its rival Facebook, which is trading at 8.6x its trailing-12-month sales despite being a much bigger company and growing much faster than Twitter.

While Twitter stock slumped on June 13, competitor Snap (SNAP) saw its stock rise over 2% on the day, marking a 14-month high.

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