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article imageWith new features coming, investors remain split on Twitter

By Michael Krebs     Feb 7, 2014 in Business
After the company issued its first earnings report on Wednesday, coming off a record high quarter and announcing new features on the horizon, financial analysts remain split on Twitter's value.
Since its IPO in November, financial analysts and institutional investors have not come to any meaningful consensus on how to price a market valuation on Twitter (TWTR) — and after the company's first public earnings call on Wednesday, Wall Street remains divided on the prospects for the micro-blogging social media platform.
On Thursday, Twitter's shares plummeted more than 24 percent after investors expressed concern about slowing user growth and a decline in "timeline views per monthly user average." However, Twitter reported a record quarter in Q4, posting an increase of 121 percent in year-on-year advertising revenue growth.
The Twitter earnings call left room for interpretation — and interpretation is always grounds for division among the financial community. The divide among institutional investors on whether or not Twitter is an undervalued or overvalued stock has led to wild divergence among analysts, as Reuters reported.
"A lack of mainstream adoption or a more simplified use case was a worry of ours coming out of the IPO and seems to have come to the fore faster than we had anticipated," UBS analyst Eric Sheridan said, according to the Reuters report.
On the earnings call, Twitter CEO Dick Costolo repeatedly maintained the seasonal nature of the advertising market, providing forward guidance on the current quarter that reflected the budget resets overwhelmingly seen among marketers in the Q1 period of any given year. Costolo additionally cited the planned roll-out of additional new features, designed to increase overall user engagement.
"Deutsche Bank analysts were particularly impressed by Twitter’s improvement in monetization, as the company reported earning $1.49 per thousand timeline views, which is a 76% year over year increase," Michelle Jones of Value Walk wrote. "They believe slowing user growth will turn around this year and head up to 1 billion users. The firm maintained its Buy rating and increased its price target to $65 per share."
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