Boston, MA 01/13/2013 (wallstreetpr) – Twitter Inc (NYSE:TWTR)’s stock was long expected to undergo correction, however, what is happening with the stock currently leaves a sour taste in the mouth of those invested in the stock. The problem with the stock is that it is highly valuated while it lacks factors to support such expensive valuation.
Currently the stock trades in the range of $57 per share. It hit an all time high of $74.73 soon after it IPOed at $26 per share. It now looks like early investors will exercise their selling rights as the stock continues to bleed value.
Wall Street analysts have increasingly become bearish on TWTR and this has contributed to the loss of value for the stock. Last week Morgan Stanly (NYSE:MS) analysts continued to the bearish coverage of the stock suggesting that the company could have it hard penetrating the broader social networking market.
Investors have been betting on the revenue prospects of Twitter Inc (NYSE:TWTR) as it looked poised to attract well-paying brand advertisers and break clear from being just a niche market stock as it is presently.
Twitter Inc (NYSE:TWTR) has continued to plummet amid this negative sentiments from Wall Street. Investors should not that the stock lacked backing for its big rise other than the fact that its advertising revenue prospects and low shares offering at the IPO increased the demand for the stock. Otherwise TWTR is yet to turn any value to justify its valuation. Furthermore, the company is still expected to report in red ink on February 5, when it reports its first quarter as a public company.
Twitter Inc (NYSE:TWTR) is expected to post $0.02 loss per share on revenue of $217 million for the fourth quarter that is coming up next month. This financial reporting will offer a clear guide to investors as to whether the company deserves its current expensive valuation. But before then, investor can stay on the sidelines.
Bottom line
The fact that there is no real news to justify Twitter Inc (NYSE:TWTR)’s current valuation makes the stock unattractive for value investors. Nonetheless, if the ongoing efforts to boost revenue and reduce losses bear fruit, the stock has enough strength to return value to investors.
