Twitter is down 6% in pre-market trading this morning.
The stock was hit with a downgrade to “under weight,” from “equal weight” by Scott Devitt at Morgan Stanley. (We think this is the equivalent of going from “hold” to “sell”.)
Devitt has a $33 price target on Twitter. The stock closed at $69 on Friday. So, for what it’s worth, he’s been wrong on the price all along.
In his note, he says he thinks Facebook and Google are better stocks to own.
His downgrade is largely based on valuation. He illustrates Twitter’s valuation relative to peers in this table:
And here is Devitt’s short synopsis of his view on Twitter:
Twitter currently trades at a premium to peers and is above our bull case, which assumes that brands will strongly embrace Twitter’s Amplify TV tie-in product. However, as the competition for online ad revenue intensifies, we see TV ad…
View original post 73 more words