Twitter's slowing growth prompts target price cuts

Twitter’s slowing user growth revived concerns among investors about the microblogging service’s prospects of one day matching Facebook Inc’s 1.2 billion users.   Twitter’s shares, which have shed about a third of their value since the beginning of the year, were set to open down 12 percent at $37.63 on Wednesday.   At least 11 analysts trimmed their target price on the stock after Twitter reported lackluster user and usage growth for the second consecutive quarter.   Twitter, in the midst of a transition to boost engagement and attract more users, said its 255 million monthly users appeared to be checking the service less frequently than a year ago.   “We continue to expect Twitter’s stock to underperform the market in the face of (what is likely) a multiple-quarter transition on user engagement and ad product adoption,” UBS Equities analyst Eric Sheridan said in a note.   Sheridan, who has a “sell” rating on Twitter shares, cut his target price on the stock to $35 from $42.   Twitter’s first-quarter results revealed slowing momentum at a company that exuberant investors just six months ago had argued could one day match Facebook’s scale. Twitter floated its shares on the New York Stock Exchange in November.   At its peak in December, Twitter enjoyed a $46 billion market capitalization on just $665 million of revenue in 2013, making it one of the world’s priciest stocks. As of Tuesday’s close, the company’s market capitalization was $25.1 billion.   Cowen and Company analyst John Blackledge cut his target price on Twitter’s shares to $26 from $32 and said he expected to see “flattish” engagement over time.   “These results appear to confirm our suspicion that Twitter’s total addressable market is fundamentally smaller than Facebook,” Blackledge said in a note.   Analysts also expressed concerns about Twitter’s shares coming under pressure after May 5, when restrictions on the sale of shares by early investors will be lifted.   Twitter’s shares closed at $42.62 on Tuesday.   Reuters