Twitter (TWTR) held its IPO in November and blew the doors off, with TWTR stock soaring 73% in its first day of trading.
But while Twitter stock avoided the immediate crash and burn of its social media kin like Facebook (FB) at its IPO, don’t think that means TWTR investors are out of the woods.
Twitter remains overvalued when you judge the current TWTR stock price vs. analyst estimates. Because even those who do not rate Twitter stock a sell or a hold right now have targets that are below the current TWTR stock price.
Take a look at some of the recent analyst opinions on TWTR:
- RBC issued a rating of “outperform” right before the Twitter IPO, but it’s TWTR price target of $33 a share was eclipsed as soon as shares began trading.
- After the stock opened at a big premium, an analyst at Pivotal Research Group actually downgraded TWTR on fears it was overbought right out of the gate, putting its Twitter stock price target a “around $29.”
- UBS issued a “neutral” rating on Nov. 15 soon after the Twitter IPO, with a $45 target. That’s slightly above current levels but below the high of over $50 TWTR hit in the first day of trading.
- Wunderlick was not so kind, issuing a “sell” rating a few days later with a $34 target.
- MKM and Deutsche bank more recently both put “buy” ratings and a $50 Twitter price target on the social media stock, but that’s a mere 14% upside from here — not a lot of room to run for TWTR stock given the nosebleed valuation on forward earnings. Some place Twitter’s earnings multiple as high as 200.
We can speculate over whether Twitter is capable of ramping up its ad business or growing its user base rapidly in the years ahead, but the bottom line is that right now Wall Street sentiment isn’t all that bullish based on Twitter stock based on these price targets.
So if you’re buying TWTR stock right now, you better be holding for the long-term … because the short-term targets for Twitter are hardly impressive.
More on TWTR Stock
- I said Twitter was overvalued about a month ago, and the stock has gone nowhere. (The Slant)
- Relive the Twitter glory during its NYSE debut. (USA Today)
- Twitter stock faces a unique risk of critical mass for its users. (MarketWatch)
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP.