Wells Fargo Cuts Twitter (TWTR) to Underperform; Co. May Have Difficult Time Meeting Investor Expectations

December 16, 2013 7:28 AM EST
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Price: $53.79 -0.04%

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    20 Buy, 36 Hold, 4 Sell

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    Up: 38 | Down: 18 | New: 7
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Wells Fargo downgraded Twitter, Inc. (NYSE: TWTR) from Market Perform to Underperform with a price target of $36-$39. Analyst Peter Stabler thinks investors are underestimating risks.

"Though we believe Twitter has emerged as a leading social communication channel, and is likely to continue a rapid release of improved advertising products and measurement capabilities, we believe investors underestimate some challenges facing the company and advertisers seeking to employ the platform. Specifically, (1) widely varying degrees of consumer engagement, (2) discounting of engagement metrics/high costs, (3) potential challenges to rapid adoption of TV related products, and (4) amplification risk associated with marketer mis-steps using the platform," said Stabler.

"We view Twitter as a transformative social platform with opportunity to expand its audience scale, consumer value proposition and advertising utility. Our view is tempered by what we believe to be a rich valuation, complexity of the Twitter platform and potential challenges to meeting high investor expectations," he added.

For an analyst ratings summary and ratings history on Twitter, Inc. click here. For more ratings news on Twitter, Inc. click here.

Shares of Twitter, Inc. closed at $59.00 yesterday.

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