Expect Twitter to Continue Flying in 2014
Things started cooling off after a Macquarie analyst came out with a downgrade following a string of negative sentiment. The downgrade was from neutral to underperform, but the $46 price target was held. Just about everyone I have spoken to regarding Twitter has said that the valuation is completely unjustified. Evidently Goldman Sachs disagreed, as the firm recently added Twitter to its America buy list and upped the price target to $65. The back-and-forth is interesting, as the company has not a drop of earnings to speak of, and there is simply no fundamental reason the stock should be this high.
Is the company’s future bright?
The insane levels of jubilation and euphoria for this stock have been unparalleled. This action is pure momentum. But why the momentum, and why has it halted? I mentioned that there are no earnings to speak of. What this stock is trading on is a projected growth in revenues. Twitter revenues were up more than 110 percent in 2013. Still, it doesn’t make money. And true, it produces nothing.