Twitter's week has been about as smooth as vomit-inducing roller coaster ride for shareholders. On Monday, Twitter announced they scrubbed the site of over 70 million bot accounts, sending the stock lower than most Twitter user's self-esteem. On Tuesday, they enjoyed a small rally in the early hours but came into contact with some dreadful news from Nomura on Wednesday morning
“We view Twitter as a stable and extremely valuable platform with long-term strategic value,” analyst Mark Kelley said in a note to clients Tuesday. “However, we see some downside risk to consensus estimates for 2019, particularly to the 1H monetization levels the Street is currently looking for. This, paired with the recent run and current valuation, leaves us expecting a reset to expectations and the stock.”
Twitter shares are down 2 percent Wednesday. The company’s shares are up 82.2 percent so far this year through Tuesday versus the S&P 500’s 4.5 percent gain.
Kelley started his price target for Twitter’s stock at $31, representing 29 percent downside to Tuesday’s close.
A PT of $31, representing a 29% downside?! Wow.
Twitter shares rose Thursday after Goldman Sachs raised its price target for the social media stock and told clients that despite recent worries about the crackdown on fake accounts, the purge will be a net positive for user engagement.
Goldman Sachs analyst Heath Terry increased his price target on Twitter to $55 from $40, arguing that the company's efforts to drive and monetize user engagement will help contribute to 25 percent upside over the next year.
“Twitter continues to build on ‘Information Quality’ efforts they first spoke about on the fourth-quarter earnings call by moderating unwanted behavior, spam accounts, and low quality tweets through product innovation, acquisition, or more active removal of violating accounts and developer applications,” the analyst wrote. "Our ad partner checks suggest that these efforts have generally been well received by advertisers and ... are contributing to incremental ad dollars flowing onto the platform."
That's right, Nomura. You can suck it. The boys over at Goldman don't have any time for your negative nelly attitude. They don't think the current price is high at all. In fact, to them, you probably look like you're higher than Afroman on 4/20.
This is an all-time, alpha move on Goldman's part. It is joined by the Larry Bird telling his opponents he was going to drop 43 against them, then checking out of the game in the 3rd quarter with a cool 43 points on the books. Not only are they setting an ambitious price target, but they're also plotting out a stake of land in the minds of Nomura analysts everywhere. Next time a Nomura analyst so much as thinks about announcing a ballsy price target, Goldman will be lingering in the back of their mind, with the knowledge that they can announce a price target in the opposite direction at any moment. And we all know whose price target will affect share price more.
We can't write Nomura off because they may very well be right, but at the end of the day, there's gonna be one big winner and one big loser. Well, probably not that big because they'll have hedged the hell out of their positions, but you catch my drift.
Twitter stock falls as company tackles fake accounts [Fox Business]