NEW YORK ( TheStreet) -- Before even going public, Twitter already has a buy rating and $50 price target from one analyst. But is this a good idea?
We saw these ratings happen with Facebook (FB) too, before it had a horrendous opening day and a difficult first year of trading.
TheStreet's Chris Ciaccia tells Debra Borchardt that the new Twitter rating just an analyst's opinion on why investors should be bullish, rather than bearish, on the stock.
But what if the stock runs up to $70 after going public?Then the analyst will simply have to adjust the numbers, like analysts always do anyway, Ciaccia said. He added that analysts are trying to make names for themselves. Twitter wants as much positive media coverage as possible leading up to the IPO. Ciaccia concluded that the company is trying to diverse its revenue streams, with 85% coming from advertising. -- Written by Bret Kenwell in Petoskey, Mich. Follow @BretKenwell