Twitter (TWTR) Stock Rising After Acquiring Whetlab

NEW YORK (TheStreet) -- Shares of Twitter (TWTR) are gaining 0.98% to $35.02 on Thursday after the company said that it acquired Massachusetts-based machine learning startup Whetlab to help better organize its social media platform, according to The Wall Street Journal. The price was undisclosed.

Several reasons for the acquisition is so that the San Francisco-based company can sift through half a billion tweets that are sent each day, and find a way to organize content, which is what Whetlab's software will do, the Journal noted.

"Over the past year, we have created a technology to make machine learning better and faster for companies, automatically," Whetlab said. "Twitter is the platform for open communication on the internet and we believe that Whetlab's technology can have a great impact by accelerating Twitter's internal machine learning efforts."

For instance, Twitter will try to group the most popular tweets into different categories like "cute animals" and celebrities, which will help attract users who view tweets but don't necessarily log in, the publication said.

Whetlab added that its company will be shutting down its services on July 15.

Additionally, this acquisition comes after CEO Dick Costolo announced last week that he will be stepping down from his position on July 1.

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 multiple weaknesses, 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.
  • In its most recent trading session, TWTR has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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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