Twitter's (TWTR) Wings Clipped
Tweet
Share
E-mail
Get Alerts TWTR Hot Sheet
Join SI Premium – FREE
All good things must come to an end...
After rising straight north since its quiet period ended in early December, shares of Twitter (NYSE: TWTR) are feeling gravity for the first time today. The social media phenom is down 11 percent to $65.25 into the close of trading on Friday. It is the largest single day drop since its November IPO, although shares remain up 151% from the $26 offering price.
Today's valuation downgrade from Macquarie's Ben Schachter triggered the sell-off this morning, although those concerns were not new. Shares had been downgraded 5 times prior to today for the same same reason and yesterday Matt Drudge of the Drudge Report also called into question the stock's valuation.
While the downgrade was not welcome news for shareholders, a larger concern of a pending IPO lock-up expiration and coming stock registration chilled the red-hot stock.
Looking further at valuation, a StreetInsider.com report overnight noted that the all-in valuation of Twitter at yesterday's close was not the $40 billion figure quoted by many, but a much higher $52 billion after accounting for RSUs and other securities. This had the stock trading at 43x its 2014 revenue estimates, well above peers like Facebook (NASDAQ: FB) trading at 12x, LinkedIn (NYSE: LNKD) trading at 11x, and Yelp (NYSE: YELP) trading at 12x.
Sometimes valuation does matter.
After rising straight north since its quiet period ended in early December, shares of Twitter (NYSE: TWTR) are feeling gravity for the first time today. The social media phenom is down 11 percent to $65.25 into the close of trading on Friday. It is the largest single day drop since its November IPO, although shares remain up 151% from the $26 offering price.
Today's valuation downgrade from Macquarie's Ben Schachter triggered the sell-off this morning, although those concerns were not new. Shares had been downgraded 5 times prior to today for the same same reason and yesterday Matt Drudge of the Drudge Report also called into question the stock's valuation.
While the downgrade was not welcome news for shareholders, a larger concern of a pending IPO lock-up expiration and coming stock registration chilled the red-hot stock.
Looking further at valuation, a StreetInsider.com report overnight noted that the all-in valuation of Twitter at yesterday's close was not the $40 billion figure quoted by many, but a much higher $52 billion after accounting for RSUs and other securities. This had the stock trading at 43x its 2014 revenue estimates, well above peers like Facebook (NASDAQ: FB) trading at 12x, LinkedIn (NYSE: LNKD) trading at 11x, and Yelp (NYSE: YELP) trading at 12x.
Sometimes valuation does matter.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Recent IPO Top Wealth Group (TWG) trading 90% higher
- European stocks 'priced for macro perfection' - BofA
- Super Micro Computer (SMCI) Falls 6%
Create E-mail Alert Related Categories
Insiders' Blog, Trader TalkRelated Entities
Twitter, IPOSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
