Twitter (NYSE:TWTR) is a stock trading on the New York Stock Exchange that has every investor on edge. Some investors expect a total catastrophe while others see Twitter shares as a perfect way of moneymaking.
This division in terms of what to expect from Twitter is also present among industry analysts and market leaders. Here are some differing perspectives on Twitter’s future prospects from leading financial analysts.
Differing Perspectives from Leading Financial Analysts
Ken Sena, a leading financial analyst at Evercore Partners Incorporated puts Twitter’s stock price at $70 at the end of twelve months. This is an ambitious valuation if you consider the fact that Twitter has not made any profit in the last three years and is currently trading at only $58.47. In response to these arguments, Sena claims that Twitter will become a leading social media platform for viewing video content. He argues that this platform will increase the value that advertisers get from advertising on Twitter.
In contrast, Daniel Ernst from Hudson Square Research sees no such potential. Actually, Ernst believes that it is impossible for Twitter to match its competitor’s in future in terms of market reach and profitability. To Ernst, the assumptions made by seemingly optimistic market analysts are highly unrealistic. Therefore, Ernst puts a $20 tag on Twitter’s share price.
What the Underwriters Have to Say
The two financial analysts mentioned above represent a growing split among investors and market analysts when it comes to valuating Twitter’s share price. In truth, Ken Sena and Daniel Ernst have extreme valuations that are at opposite ends. This is also the case when it comes to the companies responsible for Twitter’s Initial Public Offering. However, the split between these companies is a bit moderate than the split by Sena and Ernst.
Goldman Sachs, which took charge of the Twitter IPO now valuates Twitter’s share price at $65 up from its previous valuation of only $46. The investment bank cited a heightened roll-out of new products for advertisers as the basis for its new valuation. On the other hand, Morgan Stanley is not convinced of Twitter’s potential growth even though it handled various aspects of the Twitter IPO. This is why Scott Devitt, an analyst at Morgan Stanley puts Twitter’s share price at just above $30. He is of the view that Facebook and YouTube are better investments when compared to Twitter because they provide greater value for their advertisers.
The Impact of Split in Share Price Rating
This split in the valuation of Twitter’s share price has caused quite a scare in the market. Investors are no longer certain of high returns if they put their money in Twitter. Some investors are optimistic about Twitter’s prospects while others are deeply pessimistic. This is why Twitter’s share price has been swinging back and forth since its IPO. For example, Twitter’s share price experienced a seventeen percent slump last week but bounced back to hover at around $57.82 before finally settling at $58.47.