What are the Twitter Birds Saying about the Stock?

Author: Elad Mor

Twitter (NYSE: TWTR) was trading at $27.96 (18 September 2015) up 2.01% for the day. Over the past 3 months, Twitter hit a high of $36.72 on 14 July 2015 and stayed in that range until 28 July 2015 when it was trading at $36.54. However, the stock plunged to $27.04 by 7 August and by 25 August had dropped further to $24.38. These wild price fluctuations were largely brought on by global market uncertainty as a result of the Chinese equities meltdown in August. Technology stocks tend to be hit hard during times of economic anxiety, and Twitter was no exception at this time. However since August 25, 2015, Twitter has managed to consolidate, climbing towards the $28 per share range, and holding steady for the past four weeks.

In terms of general analyst opinion, Twitter has a rating of 2.5. On a scale where 1.0 is regarded as a strong buy and 5.0 is regarded as a sell, Twitter is showing that it has good value at its current price. In fact, Twitter stock is widely regarded as undervalued, and the mean target price is $39.29. Twitter has a high target of $56 and a low that is pretty much even keel with the current trading price at $26. In terms of upgrades and downgrades by research firms in 2015, there is an even split among analysts. In Q1 and Q2 of 2015, research firms such as SunTrust, Axiom Capital, Rosenblatt, Barclays and MKM Partners downgraded the stock from either a buy to neutral or a buy to hold. However Pivotal Research Group, Stifel, Monness Crespi & Hardt and Sun Trust upgraded the stock to a buy rating.

Plans in the Pipeline for Twitter

Twitter’s next expected earnings date is October 26 – 30th. The company has a market capitalisation of $18.91 billion at current prices, with earnings per share of -0.95, and no dividend/yield. In terms of its 52-week trading range, Twitter has a 1-year low of $21.01 and a 1-year high of $55.99. This shows that there is plenty of upside potential, especially given analysts’ forecasts. There is a whole lot of room for optimism with Twitter, given some of the many changes in the pipeline. One such upcoming feature that Twitter will be offering users is something known as Highlights. This is effectively a summary of recent updates on Twitter and it’s especially useful for users who have been away from the micro-blogging site. This feature was previously available only in English, but it will soon be available in all languages supported by the social media network.

Highlights and Purchases on Twitter

How it works is pretty intuitive: users will receive notifications on their smartphones as soon as the application is opened. All the highlights will be available on a new user interface, one at a time. Users will be able to quickly swipe through these until they’ve caught up with their own Twitter timeline in the present moment. Like other applications, your mobile phone notifications must be turned on to ensure that you receive the Highlights from your Twitter profile. Presently, Highlights is not available to iOS smartphone and tablet users but it is available to Android users.

One of the other issues that has been plaguing Twitter in recent months is that of finding a competent chief executive officer. This issue has been dragging on for 3 months already, and Jack Dorsey one of the founders of Twitter is now serving in this capacity. The president of Twitter is Adam Bain, and the executive chairman of Twitter is Evan Williams. It should be pointed out that Jack Dorsey needs to be fully endorsed by the board at Twitter, and there are concerns about his role at Square. The executive chairman is unlikely to want a more involved position in the company. Given the current share price, there’s a great deal of anxiety about why Twitter is not treating this issue with more urgency. There is no doubt that Twitter needs a CEO who can commit wholeheartedly to the company, and it is unlikely that Dorsey can play dual roles for too much longer. There are fundamental differences in the way that Square is being run, compared to Twitter. For starters, Square is more self-sustaining, while Twitter requires a hands-on approach.

Twitter & Facebook Playing Catch-up with eBay

The board at Twitter will likely be targeting a more proactive approach, with more hours committed to Twitter from Jack Dorsey. If he’s prepared to stick to a regimen it is likely that he will get the nod for CEO of the technology company. Twitter is evolving at a rate of knots. While the search for a CEO of continues, the technology company is making great strides in its functionality. Now – much like Facebook Groups – Twitter will be partnering with Stripe so that anyone can sell through their tweets. Twitter features buy buttons which are linked to third-party applications that work with this payments solution. In much the same way as Facebook, Twitter also wants to cash in on the e-commerce sector.

All that’s required to get started is the simple entry of basic information to make a purchase. Back in July 2015, Twitter reported its slowest growth in user numbers in over two years. It’s also interesting to point out that 67% of polled users had alluded to making purchases of items that they had seen on Twitter. This is especially important given that Twitter is the premier mobile social media micro-blogging site. In other words, people can make purchases on Twitter wherever they are. It should be pointed out that Stripe also operates with Pinterest and Facebook, by way of buy buttons on those social media sites. The race for technology supremacy in social media e-commerce is on, and Twitter, Facebook and Pinterest will be playing catch up with eBay!

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