Here's What Analysts are Saying as Twitter (TWTR) Stock Erases Earlier Gains

November 29, 2021 1:11 PM EST
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Price: $35.27 +4.23%

Rating Summary:
    19 Buy, 36 Hold, 5 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 30 | Down: 16 | New: 32
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Earlier today, Twitter (NYSE: TWTR) announced CEO Jack Dorsey will step down as CEO and that CTO Parag Agrawal will replace him both in the capacity of the CEO and a member of the Board, effective immediately.

Dorsey will remain a member of the Board until his term expires at the 2022 meeting of stockholders, the company said.

"I've decided to leave Twitter because I believe the company is ready to move on from its founders. My trust in Parag as Twitter's CEO is deep. His work over the past 10 years has been transformational. I'm deeply grateful for his skill, heart, and soul. It's his time to lead," said Dorsey.

Truist analysts have weighed in positively on the news.

“While Jack has founded an iconic and unique company, .. user growth, engagement .. have proven much more difficult to nail. As a result and even 8 years post IPO, the stock is effectively unchanged, a stark contrast to FB up ~8x, SNAP up ~2x and TTD up ~50x.”

“Appointing a CTO who's been with the company for 7 years .. makes sense to us. That said, product innovation is the type of heavy lifting, which is likely to take years not quarters to materially affect the revenue trajectory, so investors will need to be patient.”

Mizuho analyst James Lee reiterated a Neutral rating and a $70.00 per share price target on Twitter. Lee shared three thoughts on today’s news:

“First, we view Mr. Dorsey’s step down as a positive, as we believe the company needs a chief that is focused on the advertising business. Mr. Agrawal has been at Twitter for more than 10 years and CTO for the past four years. Prior to Twitter, he held research positions at AT&T, Microsoft, and Yahoo,” Lee said in a client note.

Secondly, the analyst believes Twitter will now become a more “technically-focused” company, especially when it comes to product improvements.

“As a reminder, the company is behind schedule in mDAU (20% CAGR) and DR targets (50% of revenues) established during its Analyst Day. The US MAU growth is especially important as it grew only 3% YoY in 3Q21,” Lee added.

Finally, Lee sees Agrawal as an “impressive” candidate that will make sure the management continuity is secured. Still, the analyst urged the new CEO to “improve its management bench by hiring seasoned advertising executives from either Google or FB to accelerate its DR product improvements.”

Twitter shares are now down 0.5% on the day after initially opening around 10% higher.

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