Morgan Stanley cuts outlook for Twitter stock price
08 Apr 2016
Morgan Stanley analysts lowered their forecasts for Twitter's stock price, over projected slower growth in new users, revenue and earnings.
''Engagement and new user trends remain troubling,'' the analysts said in a note to clients yesterday.
Cutting its price target on Twitter from $18 to $16 the report reduced its projection for 2017 earnings before interest, tax, depreciation and amortisation by 13 per cent to $769 million.
It cut Twitter's 2017 revenue forecast by 6 per cent to $3.23 billion.
Twitter had been struggling to attract users from outside its traditional base of journalists, politicians and celebrities and catch on with more mainstream members. In a step in that direction, Twitter signed a deal to stream US National Football League games, as it looks to drive more video deals.
According to Morgan Stanley, which kept its underweight rating on the stock, time spent per US mobile user on Twitter was down by an estimated 10 per cent in the first quarter of 2016 from a year earlier.
The note added that new mobile app downloads remained unchanged from the previous period for the second straight quarter.
Twitter had been struggling to add to its number of monthly active users (MAU) and emerge as a mainstream platform.
According to Twitter's most recent earnings results, it added 320 million users in Q4, below estimates and showed no growth from the same period in the prior year.
Morgan Stanley analysts remain concerned that even in the first quarter, which was seasonally good for active-user growth, Twitter might not report strong numbers when it releases its results on 26 April.
"Note that we see the 2016 net additions largely coming in the second half from benefits from the NFL deal, U.S. Presidential election, and Rio Summer Olympic games," the analysts wrote. "An inability for these events to deliver would likely mean even more downside to our MAU estimates."
