Twitter Inc (NYSE: TWTR)
Twitter is having yet another rough day in the market. In fact, it’s hard to imagine that at one point, the stock was trading at $69 per share. Nonetheless, I believe that we are likely to see further declines on the stock. The bottom line is that even at today’s value of just over $14 per share, I believe that TWTR is incredibly overvalued. Today, we’ll talk about why the stock is overvalued, what we’re seeing in the market today, and what we can expect to see from the stock moving forward.
Trade smarter and make more money with Tradespoon!
Why TWTR Is Overvalued
Twitter is one of the most heavily debated stocks on the market, and for good reason. Some investors look to Facebook and say, “A popular social network has to be wroth more than $14 per share” while others say “Without users, a social network isn’t worth a dime!” The bottom line with TWTR is that it is, indeed, a social network. Therefore, if the company could properly execute a plan, chances are that it would climb. However, time and time again, investors are seeing that the company can’t seem to put a plan for growth together. Instead, they continue to make excuses and do their best to get investors to brace for the impact of further bad news.
Let’s back this up just a bit. The big problem for TWTR is user data. The truth is that the social network has had a hard time bringing in new users and keeping them as regular users for some time now, and it’s clear that their problems aren’t over yet. The last earnings report released by the company showed user growth that was dismal at best and the report before that showed that daily active users were actually declining! The truth is that, as a social network, there is only one product that Twitter actually sells. One stream of revenue. That is advertising! The thing is that without users, advertisers aren’t going to pay much. Now, don’t get me wrong, Twitter does have millions of users and that’s great. However, without user growth, revenue will eventually plateau.
Last year, Dick Costolo stepped down from his position as the CEO at TWTR because he simply couldn’t get user growth under control. Investors cheered the move as Jack Dorsey, a co-founder of the social network, took control of the company. However, Dorsey hasn’t done anything either. Sure, he has opened up new advertising opportunities. But there hasn’t been a solution found to the core problem the company is facing under his watch, and given his track record, I don’t see a solution in the future either. The bottom line here is that TWTR is a company that lacks the fundamental ability to plan for growth and follow through with that plan. As a result, the stock is destined to fall further.
What We’re Seeing From Twitter Today
Looking at the stock chart on TWTR for today gives you a glimpse of what I expect we will see for some time to come – declines! The truth is that, at this point, investors have lost faith in the social network, and rightfully so. As Twitter continues to prove that its management is lacking and can’t seem to solve problems, the stock is only going to dive further. Currently (10:37), TWTR is trading at $14.25 per share after a loss of $0.34 per share or 2.33% thus far today.
$10 Price Target Set On Twitter
In the past, I haven’t set price targets for stocks. However, that is going to change today. In fact, CNA Finance will start offering 12-month price targets on various stocks that we decide to analyze. With that said, after watching TWTR for quite some time, and for all of the reasons mentioned above, I have decided to set a price target of $10 per share on Twitter. I believe that by May 12, 2017, this is where the stock will be trading. To get a full list of CNA Finance price targets, click here!
Don’t waste your time! Click here to find winning trades in minutes!
What Do You Think?
Where do you think TWTR is headed moving forward and why? Let us know your opinion in the comments below!
[Image Courtesy of Pixabay]