A “Neutral” Outlook is Fair for Twitter
Twitter Stock (TWTR) took another beating this trading week as the share’s outlook rank was demoted from “buy” to “neutral” by Jim Crammer’s financial news corporation, The Street (TST). Although not catastrophic news for the household social media brand, the Street’s price outlook has shrunk from $57 to $39, due to a lack of “catalysts for.. improving”.
Investors have been nervous for months as the long time unpopular CEO Dick Costolo continued to oversee shrinking growth and an embarrassing 9% cut in revenue from the last quarter in the latest report.
Costolo finally threw in the towel, (fleetingly) raising share price on the announcement, and will resign effective July 1st. The outgoing CEO will be replaced by the much acclaimed former Twitter visionary Jack Dorsey. Can Jack Dorsey turn Twitter around, break the stagnation and enjoy the growth that Facebook does? Pundits are not convinced.
There are some blessings Twitter can still count. The company maintains some degree of adaptability: whether its the recent installation of autoplay videos (mimicking those on the Facebook newsfeed), the commendable “share block list” feature, and the new app install ads. Of course, Twitter ‘s viability and “buyability” always falls back on their massive following, with 302,000,000 active monthly users world wide. Lastly, one of the heaviest weights on the stock price currently is the turbulence at the top; if interim leader Jack Dorsey or the company’s new upcoming CEO choice can unite the flailing board and give the company a clearer, stronger, and more pointed direction for the future (long term and short term), current stock holders could see delightful gains.
Even pessimistic pundits concede that Twitter has room for growth, with a sea of untapped potential. The keys to sustained growth and a coordinated effort to fight off competition lie in the hands of the board of directors, who must shake off the growth-to-maturity midlife crisis that created the toxic atmosphere at the top of the company. The downside risk is just as daunting as the upside risk. This reality makes “neutral” a fair outlook for Twitter..