NEW YORK (MarketWatch) - Twitter, twitter on the wall who is the fairest of them all? Now that Facebook has made a $19 billion splash with WhatsApp, is Twitter more beautiful as it looks at itself in the mirror of social media?
Twitter's price has not reacted to Facebook's latest move the way BlackBerry did.The chart shows TWTR is still underperforming the market .as the price dropped from a high of $75 to $56, the price as I write this. Price has broken below the 50-day moving average (MA) uptrend currently at around $60 and is struggling to correct that short- term sell signal trying to move back above $60. The chart signals indicate that continued testing of $50 support is likely. Muddying the waters is the short position, and the unlocking of restrictions on selling stock by employees and others. Obviously both of these factors are leaning on price in addition to the poor earnings report.
/conga/story/2014/03/trading-strategies.html 298587
The analysts' consensus 12-month target for TWTR is near $50, but a recent analyst just upped the target to $65. The highest target is near $75, but only 3 of 23 analysts have it as a buy .That implies that most want to see lower prices before recommending a buy. Obviously the negative break below the 50-day MA reflects the lack of analyst enthusiasm at these prices.
The fundamentalist valuation models at trefis.com peg TWTR at near $29 , so you can understand why most analysts do not have a buy on TWTR. The challenge for Twitter is to monetize its base and grow from the 14% market penetration it has in the U.S. It is very busy building out its advertising platforms, but increasing the rate of growth in users is more important.
I am associated with two quantitative services that value TWTR, but cannot give an overall rating due to a lack of data. StockpickerUSA.com shows the analyst revision rank is the worst . ChaikinAnalytics.com uses both fundamentals and technicals, and its founder is a famous technician, and it shows Chaikin money flow is in the red , taking price down and analyst opinions are also in the red or negative. Signals show that price was technically oversold at $50 and is now bouncing as a result.
Even though most fundamental analysts are appalled at the $19 billion paid for WhatsApp, it is still cheap compared to the valuation of Twitter on a per-user basis. WhatsApp cost $42 per user compared to the estimated $126 per-user valuation of Twitter. It is unlikely anyone is going to acquire Twitter short term at these valuations. If Twitter grows its base as fast as Facebook made its mid-course correction to mobile, there is a bright future ahead. The latest earnings reports questions TWTR's ability to do that.
Twitter is ideally suited for mobile and those using Twitter on a mobile account for 70%-75% of its business. Unlike the bulky format of Facebook , TWTR's small sound bite, with attached photos or links and hash tags to attract others, fits right in with the mobile world of keeping it short.
Twitter is ubiquitous, and you can read tweets as you watch a television program that everyone is tweeting on, real time. It can be war, uprisings, sports, or personalities that everyone is tuned in to discuss. For example, the Super Bowl just set a record of 24.1 million tweets. You get to cast your opinion vote on Twitter as most recently with the Olympics.
The high analyst 12-month target of $75 (also the old high in its stock price) implies a return of 34% from the current price of $56 (at this writing) on just a retracement back to $75. This is attractive to small investors, but professionals want a great deal more considering the risk, and the enormously high valuation of Twitter based on very aggressive growth projections.
Twitter needs to focus the way Facebook did on user growth. When the stock price is based solely on aggressive growth in users, it better be there every quarter, or price goes down, as in the case of TWTR currently.
(Nothing in this column is a recommendation to buy or sell Twitter stock. Novices need to consult with a professional financial adviser about our comments. Everyone needs to do their own due diligence on Twitter. Analyst price targets are educated guesses and technical analysis buy/sell signals on a chart can be wrong. Buying extremely overvalued, aggressive growth stocks is highly risky.)
Tidak ada komentar :
Posting Komentar