Only one other major investor, Benchmark Capital Management Co LLC, which owns 31.6 million shares, has publicly stated that it will not sell the stock when the lock-up expires.
“Despite some key investor and executive statements that they will not sell near term, we estimate that 50-70 percent of shares could be unlocked,” JPMorgan Chase & Co analyst Doug Anmuth said in a research note on April 30.
THE OTHER CAMP
Still, Goldman and Deutsche Bank, both underwriters of the high-profile IPO, maintain their positive views of the stock, in spite of the user trends, two consecutive quarters of disappointing results and the decline in its shares.
Twitter shares trade at 334.2 times forward earnings, far more than Facebook’s 38.1 times, according to StarMine, or the average of 17.95 for the Standard & Poor’s 500 Index, according to Thomson Reuters data.
“The company continues to execute near-flawlessly around items in its control like revenue and expenses,” Deutsche Bank analyst Ross Sandler wrote in a note on Thursday, a day after Twitter posted its second-quarter results. Sandler didn’t immediately return a phone call and an e-mail. Goldman Sachs analyst Heath Terry was traveling and not available for comment, his assistant said.
Sandler said market sentiment would eventually shift away from users toward revenue growth. Facebook, he argued, also struggled with slow user growth last year before regaining Wall Street’s favor thanks to its strong mobile ad business.
Schachter, the Macquarie analyst, says much will depend on how successful Twitter will be in revamping its site to attract mainstream users.
“They are executing well in terms of innovation, but the user growth is a bit of a concern,” he said. “The hope is that they can change the site, to make it more user-friendly.” (Reuters)