Shares of social media platform
are moving sharply lower today, tumbling by as much as 12% at time
of writing. This downturn in
continues the slump in shares of the newly-public company, as
Twitter recently delivered investors an uninspiring earnings report
that featured lackluster user growth and sent shares falling by
nearly 10% following that release.
Today though, the main focus was on the expiring lockup period for
nearly 490 million shares
held by Twitter insiders and executives. Now, these insiders can
sell their shares, and it looks as if many decided to exercise this
option in early Tuesday trading.
Shares hit a fresh all-time low as a result of many of these
insiders selling their shares at the first possible opportunity,
pushing TWTR further below the IPO price and down to just
$34/share. Volume was also elevated in Tuesday trading-to say the
least-as close to 65 million shares moved hands by midday, compared
to roughly 13 million in a normal full session.
Longer Term Prospects
Obviously the exodus of Twitter shareholders on the lockup
expiration day isn't good news for the future, but what has been
the trend for earnings estimates been as of late?
The earnings estimate revision picture is overall pretty mixed for
TWTR. However, it is worth noting that TWTR now has a Zacks Rank #3
(Hold), down recently from a Buy, and that many of the newer
estimates have been falling for the company.
In fact, revisions downward have been outnumbering upward revisions
on roughly a 5:1 ratio over the past week, pushing the current
quarter estimate down to a loss of 27 cents a share from last
week's consensus of a 24 cent loss.
The biggest change was in the company's longer term outlook though,
as the consensus estimate for next year's earnings fell from a loss
of 67 cents a share to today's consensus of a loss of 85 cents a
share, suggesting increased bearishness on the firm.
Twitter has faced a very rough period as of late, as the stock has
struggled under the weight of high expectations and general disdain
against momentum securities. Plus, with weakness in terms of the
company's user growth, worries are starting to develop over the
firm's ability to grow revenues and eventually create profits over
the long term too.
Add in the stampede of Twitter insiders out of TWTR, and investors
arguably have a continued recipe for disaster on their hands with
this floundering social media stock. Personally, I am staying far
away from TWTR for the time being as a result of this, but what
Do you think that
can turn things around, or is the pile of negative factors too much
to overcome right now for this social media company?
Let us know in the comments section below!
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