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4 Key Risks Goldman Sees At Twitter

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The share price of Twitter Inc (NYSE: TWTR) has declined 33.45 percent over the last six months, from a high of $42.27 on April 28.

Heath P. Terry of Goldman Sachs has maintained a Buy rating on the company, while lowering the price target from $44 to $40.

Although Terry sees four key risks facing the company in the form of failure to drive user growth, monetization, engagement and competition, he also believes that the value of the platform is underrepresented.

Analyst Heath Terry mentioned that the company reported its Q3 revenue, representing 58 percent year-on-year growth, above the consensus. The revenue grew at over 64 percent on an FX-neutral basis, from over 68 percent in Q2.

Related Link: Stifel Upgrades Twitter To Buy, Sees It 'Taking Flight'

Twitter’s MAU growth slowed during Q3 to over 11 percent year-on-year, with over 4 million net adds. However, the adjusted EBITDA came in ahead of the consensus.

“Despite the slowdown in MAU growth and 4Q outlook below expectations, we continue to believe the accelerated pace of product innovation, including the recent launch of Moments, should improve ease of use and expand the audience,” Terry stated.

With regard to monetization, ad revenues grew more than 60 percent year-on-year, driven by more than 57 percent growth in the US and over 66 percent internationally.

The 2015-2017 revenue and adjusted EBITDA estimates have been reduced “to reflect the slowing usage growth and incremental marketing & product investments.”

Latest Ratings for TWTR

DateFirmActionFromTo
Mar 2017BarclaysInitiates Coverage OnUnderweight
Feb 2017CitigroupDowngradesNeutralSell
Feb 2017Loop CapitalDowngradesHoldSell

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Posted-In: Goldman Sachs Heath P. Terry VetrAnalyst Color Price Target Analyst Ratings Tech

 

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