Twitter shares tumbled Friday after a brokerage analyst warned the
popular messaging network was overvalued following a meteoric rise since
its initial public offering in November.
Twitter shares closed down
12.99 percent at $63.79. But the stock has more than doubled from its
offering price at $26 on November 7.
Jon Ogg at 24/7 Wall Street
said Friday's decline followed a five percent gain on Thursday which put
Twitter at a record high of $73.31.
"Twitter's stock valuation has been difficult or impossible for Wall Street analysts to deal with," Ogg said in a blog post.
said at the start of the day, Twitter was trading at roughly 62 times
expected 2013 revenues and about 35 times expected 2014 revenues.
"Another negative is that the company is expected to lose money in 2013 and in 2014," he added.
has become massively popular around the world, but some analysts are
skeptical about its ability to boost usage and revenues to become
The catalyst for the selloff came from Ben Schachter
at Macquarie who changed his rating to "underperform" from "neutral,"
noting that Twitter was up 40 percent since December 11.
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,"
Meanwhile Bespoke investment group released a
chart on Twitter noting that the stock appears to have paralleled Google
market action in its early trading days.
Following up on that
tweet, the investment firm tweeted, "Didn't say $TWTR was $GOOG, just
highlighting how closely their caps have tracked in their early days