Shares of Twitter are on a blazing rocketship path, and people are scratching their heads trying to figure out why.
The stock is up about 100% since late November, having closed yesterday at $US73.31.
The surge has now gained mainstream attention — yesterday even Matt Drudge was tweeting about it, and about how he thought it was doomed.
Ben Schachter at Macquarie has now downgraded the stock, writing:
The Bottom Line — We expect this to be among the shortest downgrade note you’ve ever read, as nothing fundamentally has changed since our Neutral initiation on Dec. 11, except that shares have risen 40%. When we launched on TWTR 15 days ago, we laid out pros and cons and stated that TWTR was worth $US46/share. Since that time, on the back of virtually no new news, the stock has risen in value 40% (vs. 2% for the S&P 500). Since the IPO open on 11/7, TWTR shares are up 62% (vs. a 4% gain for the S&P 500). We continue to believe that Twitter as a company has a bright future and many opportunities ahead. However, as a stock, we believe nothing has changed over the last 15 days to justify the rise in valuation. Therefore, we are reducing our rating to Underperform, from Neutral, and maintaining our estimates and $US46 target price.
Macquarie expects that other analysts will also be downgrading the stock very shortly.
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