Twitter (TWTR) Stock Declining as Flipboard CEO Won't Confirm Acquisition Rumors

NEW YORK (TheStreet) -- Shares of Twitter (TWTR) are falling by 0.25% to $36.22 in Wednesday afternoon trading, after Flipboard's CEO Mike McCue said that he will not comment on talks that Flipboard will be acquired by Twitter, according to CNBC

Twitter has been in talks with Flipboard for quite some time about a possible acquisition of the digital magazine app, which could be valued as high as $1 billion, Re/Code reported this weekend. 

"If you build something that has value to users, and you have users who are coming in every single day by the millions, these rumors are naturally going to happen," McCue said in an interview with CNBC's "Squawk Alley."

He did however, say that the two companies have a close partnership and that the news reader app will do more with Twitter over time, CNBC added. 

For now, the company is planning to focus more on promoting content rather than on apps. 

TheStreet Ratings team rates TWITTER INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate TWITTER INC (TWTR) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. Among the areas we feel are negative, one of the most important has been unimpressive growth in net income over time."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Internet Software & Services industry average. The net income has decreased by 22.7% when compared to the same quarter one year ago, dropping from -$132.36 million to -$162.44 million.
  • Compared to where it was a year ago, the stock is now trading at a higher level, and has traded in line with the S&P 500. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
  • TWITTER INC's earnings per share declined by 8.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TWITTER INC continued to lose money by earning -$0.96 versus -$1.05 in the prior year. This year, the market expects an improvement in earnings ($0.34 versus -$0.96).
  • Despite currently having a low debt-to-equity ratio of 0.43, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 10.08 is very high and demonstrates very strong liquidity.
  • Compared to other companies in the Internet Software & Services industry and the overall market, TWITTER INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: TWTR Ratings Report

More from Markets

Dow Dives on Earnings Disappointments From Caterpillar, 3M

Dow Dives on Earnings Disappointments From Caterpillar, 3M

Tesla Critic Citron Research Changes Its Mind, Goes Long on the EV Maker

Tesla Critic Citron Research Changes Its Mind, Goes Long on the EV Maker

Philip Morris Rolls Out New Smokeless Cigs to Fire Up Sales

Philip Morris Rolls Out New Smokeless Cigs to Fire Up Sales

Verizon Beats Q3 Earnings Estimate, Postpaid Phone Additions Top Forecasts

Verizon Beats Q3 Earnings Estimate, Postpaid Phone Additions Top Forecasts

Stocks Tumble, Dow Futures Plunge as Growth Risks Catch Up to Global Markets

Stocks Tumble, Dow Futures Plunge as Growth Risks Catch Up to Global Markets