Yesterday, Twitter investor and founding partner of Lowercase Capital Chris Sacca revealed his ideas on how to fix the struggling Internet company.
Cramer noted that Twitter's quarter is "totally at risk." He calls the short term "terrible", but sees the long term as "bright."
The social media giant was downgraded to "hold" from "buy" by analysts at Evercore.
The firm also lowered its price target to $39 from $49, citing conservative long term growth prospects and a lack of visibility regarding user growth.
Analysts at the firm believe Twitter's direct response efforts will not match what Facebook (FB) is building.
San Francisco-based Twitter is a global platform for public self-expression and conversation in real time, where any user can create a tweet and any user can follow other users.
The company generates its advertising revenue primarily from the sale of its three promoted products which include promoted tweets, promoted accounts and promoted trends.
Insight from TheStreet's Research Team:
Twitter is a core holding of Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. During the most recent weekly roundup, this is what Jim Cramer, Portfolio Manager and Jack Mohr, Director of Research - Action Alerts PLUS had to say about the stock:
Twitter ( TWTR:NYSE; $36.67; 1,400 shares; 1.98%; Sector: Technology): According to tech news site Re/code, Twitter has been in talks to acquire the social media aggregation app Flipboard at a valuation of more than $1 billion.
Flipboard's app aggregates links and other content shared by users on social networks, and presents them in an attractive magazine-style format. Re/code indicates that the deal would be all stock and notes that talks have been ongoing since the beginning of the year.
At over $1 billion, this would be Twitter's largest transaction ever (TellApart was about $550 million and MoPub around $350 million), and an all-stock transaction would likely be roughly 4% to 5% dilutive. We continue to believe that M&A activity remains a focus area for Twitter, as it looks to expand its presence in ad tech, video, curation, e-commerce, and analytics.
Flipboard's user-friendly content aggregation across multiple platforms, and content types as well as recent push for a more streamlined web-based experience and Promoted Items product could be a fit for Twitter.
That being said, we're disappointed that the company is reportedly paying via equity, considering the shares are trading at such low levels. For instance, if Twitter purchased Flipboard when its stock was at $50, the deal would be 3% dilutive vs. 4.6% currently (assuming a $1.1 billion deal value).
In other words, Twitter would be theoretically paying $330 million more than it would have if it launched its bid in late April, before reporting miserable first- quarter 2015 results. We're lowering our target to $45, from $52, on more muted expectations in the near-term.
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