Big Shake-Up at Twitter: Can Promised Changes Revive This Stock?
After examining the social-media company’s fundamentals and expectations for the fiscal 2016, Morgan Stanley cut its target price to $16 a share from $18 and lowered expectations for the company.
Then, on Friday, reportedly shook up its board.
Can the company revive itself, or is Twitter on the path to becoming a toxic stock?
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In its analysis, Morgan Stanley’s Brian Nowak wrote: “We believe TWTR’s core user engagement remains in decline, as time spent per U.S. mobile user fell by an estimated 10% year over year … TWTR’s time spent per user is already among the lowest in the social group … and is still in decline.”
The most recent earnings results for Twitter show that the company had 320 million users in the fourth quarter, well below estimates and flat with the previous quarter. In the fourth quarter, the average mobile user spent just 2.7 minutes per day on Twitter, versus 30.3 minutes on Facebook and 40.5 minutes on Pandora.
Granted, Twitter was designed for succinct communication. After all, it is famous for having a 140-character limit.
But considering the millions of tweets from politicians, celebrities, companies and everyday people, 2.7 minutes isn’t a lot of time.