Macquarie Capital Downgrade of Twitter Sees Share Price Plumet After Christmas Highs

[Ethan]

Twitter’s share price is falling sharply and rapidly for the second straight session, down more than 5% in early trading on Monday, pushing the stock below $60 before rebounding somewhat in the afternoon.

Since Twitter’s shares hit a new record high on Thursday, enjoying a 7.6 percent gain, its shares have been plummeting ever since. The company’s shares dropped 13% on Friday, losing more than $5 billion of its market capitalization, and erasing an additional $2 billion by late morning on Monday. As for now, Twitter’s peak stock price seems to be $74.73.

The company was highly praised for the way it handled its IPO, but after Macquarie Capital knocked Twitter from “neutral” to “underperforming”, the stock has been falling rapidly on the New York Stock Exchange. Twitter had enjoyed a high-flying 20-day run from December 6 to December 26 as stock prices surged by over 63 percent during that time.

Earlier this month, Bloomberg had surveyed investors and stated that two-thirds believe Twitter’s stock price will plummet over the next 6 months. Twitter has come under much pressure since then as analysts kept questioning whether the company could give grounds for it’s stock price, which rose to more than 70% in November. Though Twitter’s potential to expand its user base cannot be rivalled with Facebook and LinkedIn, it’s early stock performance had been less unstable than that of Facebook.

Despite the stock plummet, Twitter’s stock performance isn’t in “big” trouble as many investors and analysts would claim. The company’s stock was doing quite well just a few days ago and the recent ups and downs in stock price seems to be largely driven by momentum.

It would’ve been very unusual to see the company maintain its peak performance without a considerable change in profitability. Twitter’s ad strategy targeting mobile users could help its financial performance in a great way in coming days, but this is likely to only temporarily raise hopes for investors.