SAN DIEGO, CALIF. (TheStreet) -- Twitter (TWTR) found itself the benefactor of a stock upgrade from Pivotal Research Group on Tuesday, as the firm changed its recommendation from "hold" to "buy." The upgrade, though a sign of faith in Twitter's revenue potential, is more a product of Twitter's terribly performing stock, which has slid so far back in value to finally make it a bargain.
"We have long viewed Twitter positively at an operating level despite prior ratings which have mostly been HOLD or SELL," Pivotal analyst Brian Wieser wrote in the firm's report. "Where we have been negative much of the time since Twitter's IPO is with the valuation that investors have ascribed to it given its venture-like characteristics and our view that the core product has only niche market potential at maturity."
Twitter's stock is down more 44% on the year as investors have noticeably reigned in their enthusiasm for the once-hot stock on concerns about the social network's ability to grow its monetizable audience. The company's market cap now hovers around $22 billion, less than half its value from when shares were trading as high as $74.73 at the end of last year.
Instagram, the Facebook (FB) -owned property that Twitter tried to buy first, isn't exactly helping matters. Earlier in the week, the photo-centric social network said it now has more than 300 million monthly active users, making it bigger than Twitter, which reported 284 million active users during its third-quarter earnings report.