If you have decided to invest in stocks yet you do not know which one is the most suitable for you, then you might want to avoid Twitter Inc (NYSE:TWTR) at the moment. Here is why not to buy Twitter shares:
While it is true that Twitter is a very popular social networking platform, it has always been right under Facebook and, at the time being, its shares have decreased after Wall Street has given it a negative research call, in spite of the fact that the rating of the website has not been downgraded in any way. If the rating of Facebook is currently of “buy”, the ratings of Twitter has been changed from “hold” to sell by Cantor Fitzgerald due to “excessive valuations”. The valuation of Twitter has been very high as opposed to other similar companies, since the moment it went public at no less than $26 per share back in November 2013. As we speak, the valuation is three times bigger and that is out of control.
The reason why Twitter has received this negative call from Wall Street is that the stock loses money and, as some advertisers and analysts suggest, there is even a small deceleration in the growth rate of Twitter, in spite of the fact that the number of users rises more and more with every year that passes (just like it happens with Facebook).
Statistically speaking, Twitter is down by one tenth since the end of last year, and the shares have decreased by two and a half percents yesterday. In other words, the stock has reached its peak by the end of December last year (when it reached over $74) and since them it has decreased by approximately one fifth. This is why it is recommended to avoid investing in Twitter at the moment, especially if you are looking for a long-term investment option.
It is believed that Twitter is currently worth no less than $32 billion, and in 2014 its sales are expected to be of only little over $1 billion, which is very disappointing for some. This is yet another reason why you should think twice before investing your cash in this. Twitter still is a highly effective way for both regular people and celebrities to keep in touch with others, but then again it is a demonetization site for content creators and it may not be the best choice in terms of investment stocks. Besides, there are other options that are far more effective at the moment.