Twitter Analysts Don’t See Quick Rebound as Stock Dives 20%

(Bloomberg) -- Twitter Inc. shares plummeted on Thursday, after the social-media company reported third-quarter results that came in well below expectations and gave an outlook that was seen as weak.

The stock shed as much as 20%, erasing more than $4.5 billion from the company’s valuation. Thursday was the biggest one-day percentage loss for the stock since July 2018, and the sell-off took shares to their lowest level since March.

The “share price may continue to be under pressure as revenue headwinds will likely persist in the near term,” wrote Hao Yan, an analyst at Citi.

The analyst reaction to report was broadly negative, with Goldman Sachs downgrading the stock to neutral from buy. Analyst Heath Terry cited “the lack of visibility into the remediation of the advertising platform, uncertainty around Twitter’s ability to drive broader advertiser demand, and the risk of further multiple compression.” He also cut his price target to $34 from $52.

MKM Partners speculated “whether one can confidently have a view on Twitter’s long-term potential,” describing issues in the quarter as “internal, self-inflicted, and (probably) fixable over the near term.” Analyst Rohit Kulkarni has a neutral rating on the stock.

Loop Capital Markets called the quarter “a disappointing setback,” adding, “We did not foresee the revenue shortfall. We did anticipate better user growth.”

The firm reiterated its buy rating and $55 price target but wrote that “we do not think the stock will recover quickly,” particularly in a market that has been shunning “longer-duration, higher-risk investments.”

Baird trimmed its price target by $1 to $39, calling the results “disappointing.” However, it called Twitter’s user growth “a positive sign of ongoing product improvement,” and added that if platform issues prove transitory, then “today’s pullback could prove to be an opportunity.”

To contact the reporter on this story: Ryan Vlastelica in New York at rvlastelica1@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Steven Fromm

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