In his research note, Peck grouped Twitter in with Google
(AMZN) and LinkedIn
(LNKD), while suggesting that Twitter "has a long runway in its core business." As evident by the swift exit of the company's pre-IPO shareholders, they lack the confidence in these projections.
I think it's a mistake for investors to put too much credence in this recent target absent clear signs that management can turn this utility into an actual cash-generating machine.
Bulls will argue the results weren't all bad. The company delivered revenue that was higher 119% year over year, easily beating analysts' expectations of a loss of 3 cents per share on revenue of $241 million. But revenue has never been the problem. Getting users to become and remain interested is the biggest challenge.
Until management figures out ways to turn this utility into a necessity, Twitter will continue to struggle. I will continue to avoid the stock.
At the time of publication, the author held no position in any of the stocks mentioned.