Boston, MA 12/31/2013 (wallstreetpr) – The surge in the stock price of Twitter Inc (NYSE:TWTR) has confounded the analysts. Experts in equity markets, studying the company are not comfortable with the manner the investors are trading the stock, and they believe that the stock will bottom around $44 per share, when the reality eventually sinks into the minds of the bullish players.
The impact of the bearish sentiments by analysts on the stock can be seen in the manner that it has tumbled since Macquarie Capital issued a downgrade note. Since debuting on New York Stock Exchange in November, Twitter Inc (NYSE:TWTR) is up more than 145 percent and it has gained about sixty seven percent since December 1. In twenty days between December 6 and December 26, the stock jumped around 63 percent.
Reason behind the rally
As said earlier, Wall Street cannot find sufficient reasons as to why investors are crazy about Twitter Inc (NYSE:TWTR). There are no factors to support the stock’s current valuation. And while analysts agree that as a company Twitter Inc (NYSE:TWTR) has a lot of opportunities and that its profitability could actually come earlier than envisioned 2015, the stock is unreasonably expensive.
Among the possible reasons, why the stock is rising, one reason could be the limited number of shares that are available for trade. Moreover, the prospects of the company are also driving bullish sentiments among investors.
However, the stock would eventually correct at around $44 per share when sobriety enters the market, and more so, after the company reports its first earnings since listing.
Since IPO
Twitter Inc (NYSE:TWTR) debuted on the Big Board with a share trading at $26. On that day, it traded up more than 74 percent and it has never looked back since then. Occasionally it slumps when investors pay a lot of attention to analysts, but again things soar beyond imagination a day or two after.
The visible long lasting impact on the stock has been the Macquarie Capital’s downgrade note which has seen Twitter Inc (NYSE:TWTR) maintain a downward spiral since last week. The stock is trading around $60.51 which is down from this month’s peak of $74.64. It remains to be seen how the investors are going to react on the stock in the upcoming couple of days when the Macquarie Capital’s downgrade on the stock, still hangs around.
