Analysts Scramble to Downgrade Twitter after Disastrous Q2 Report

twitter-twtr-logoWall Street analysts are out in droves this morning, eager to pile negative sentiment on Twitter following yesterday’s awful earnings report.

To refresh your memory, Twitter’s revenue forecast was nearly 15% lower than what analysts expected.

Analysts aren’t taking that weak guidance lightly, and several bearish calls have hit the wires this morning:

  1. Mizuho Securities doesn’t recommend buying TWTR after a mixed Q2 and light guidance. The firm said Twitter looks more like Yahoo (ouch) than a powerful social media site. Challenges include how to monetize a slow-growing user base, as well as increased competition from peers in the space. Mizuho did note, however, that upcoming live streaming of the NFL, Olympics, Politics, and continued product innovation could help boost engagement levels through the end of the year.
  2. Axiom Capital downgraded TWTR from Buy to Hold and cut its price target from $18 to $16, citing three straight quarters of below-consensus guidance. The analyst also cited limited visibility into advertising growth for the lowered view. Lower ad demand and higher competition headwinds should persist, so the only saving grace could be its live streaming plans.
  3. Stifel Research reiterated its Sell rating on TWTR, and cut its price target all the way to $9 (suggesting a 50% downside). The firm noted Twitter again missed revenue expectations and offered a weak outlook. Stifel sees no catalyst for recovery on the horizon.
  4. RBC Capital cut its target on TWTR from $20 to $17, citing modest monthly user growth, slowing revenue growth, decent margins, and weakening monetization growth.

TWTR-2016-07-27

Twitter shares fell $1.99 (-10.79%) to $16.46 in premarket trading Wednesday.

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