Twitter (TWTR) Stock Jumps in After-Hours Trading as CEO Costolo Quits

NEW YORK (TheStreet) -- Shares of Twitter Inc  (TWTR) were higher by 7.45% to $38.50 in after-hours trading Thursday, following the company's announcement that its CEO Dick Costolo is stepping down, Reuters reports.

Costolo will step down from the position on July 1, while co-founder Jack Dorsey will act as interim CEO to take his place.

According to a regulatory filing, Costolo will continue to serve on the company board, Reuters noted.

In a Twitter post, Costolo welcomed Dorsey back.

In response, TheStreet's Jim Cramer, Portfolio Manager of the Action Alerts PLUS Charitable Trust Portfolio tweeted:

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.

Separately, 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

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