Shares of social media platform Twitter (TWTR - Free Report) are moving sharply lower today, tumbling by as much as 12% at time of writing. This downturn in TWTR continues the slump in shares of the newly-public company, as Twitter recently delivered investors an uninspiring earnings report that featured lackluster user growth and sent shares falling by nearly 10% following that release.
Today though, the main focus was on the expiring lockup period for nearly 490 million shares held by Twitter insiders and executives. Now, these insiders can sell their shares, and it looks as if many decided to exercise this option in early Tuesday trading.
Shares hit a fresh all-time low as a result of many of these insiders selling their shares at the first possible opportunity, pushing TWTR further below the IPO price and down to just $34/share. Volume was also elevated in Tuesday trading—to say the least—as close to 65 million shares moved hands by midday, compared to roughly 13 million in a normal full session.
Longer Term Prospects
Obviously the exodus of Twitter shareholders on the lockup expiration day isn’t good news for the future, but what has been the trend for earnings estimates been as of late?
The earnings estimate revision picture is overall pretty mixed for TWTR. However, it is worth noting that TWTR now has a Zacks Rank #3 (Hold), down recently from a Buy, and that many of the newer estimates have been falling for the company.
In fact, revisions downward have been outnumbering upward revisions on roughly a 5:1 ratio over the past week, pushing the current quarter estimate down to a loss of 27 cents a share from last week’s consensus of a 24 cent loss.
The biggest change was in the company’s longer term outlook though, as the consensus estimate for next year’s earnings fell from a loss of 67 cents a share to today’s consensus of a loss of 85 cents a share, suggesting increased bearishness on the firm.
Twitter has faced a very rough period as of late, as the stock has struggled under the weight of high expectations and general disdain against momentum securities. Plus, with weakness in terms of the company’s user growth, worries are starting to develop over the firm’s ability to grow revenues and eventually create profits over the long term too.
Add in the stampede of Twitter insiders out of TWTR, and investors arguably have a continued recipe for disaster on their hands with this floundering social media stock. Personally, I am staying far away from TWTR for the time being as a result of this, but what about you?
Do you think that TWTR stock can turn things around, or is the pile of negative factors too much to overcome right now for this social media company?
Let us know in the comments section below!
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>