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Twitter stock slides on second trading day

NEW YORK — Twitter’s stock slid more than 7 per cent on its second trading day yesterday (Nov 8), after the popular short messaging service saw a huge first-day pop in what turned out to be a smooth public debut.

Twitter stock slides on second trading day

File photo: Reuters

NEW YORK — Twitter’s stock slid more than 7 per cent on its second trading day yesterday (Nov 8), after the popular short messaging service saw a huge first-day pop in what turned out to be a smooth public debut.

Such volatile trading is common for freshly public stocks as investors make decisions with limited insight into how well companies will do in the long run. Although there are a few outliers, most analysts believe the appropriate price range for Twitter’s stock is in the S$37s and low S$50s. The mean target price analysts have set for the stock, according to FactSet, is US$40, with targets ranging from US$29 to US$54.

Wedbush analyst Michael Pachter arrived at his US$37 price target by assuming Twitter will double its 230 million monthly users to 460 million over the next five years while increasing the number of times users look at Twitter every day. Mr Pachter estimates Twitter will deliver US$3.5 billion in EBITDA — earnings before interest, taxes, depreciation, and amortization — by 2018.

“Twitter is likely in the early innings of its growth,” Mr Pachter wrote in a note to investors. “We believe that the majority of the world’s 2.4 billion Internet users have great potential to find something or someone on Twitter that they are interested in.”

San Francisco-based Twitter’s stock fell US$3.25, or 7 per cent, to US$41.65 in trading on Friday despite an uptick in the broader market.

The shares are still up 60 per cent from the $26 IPO price Twitter and the IPO’s underwriting bankers set Wednesday night. Twitter made US$1.8 billion in the offering. On Thursday, the company’s stock jumped 73 per cent in its first day of trading, creating hordes of new millionaires —and even a few billionaires. AP

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