Daily Ticker

Will Twitter's earnings justify its stock price?

Daily Ticker

Soon after the market closes today, millions of consumers and investors will finally learn if Twitter (TWTR)  is as popular an app and as valuable a company as its stock price suggests.

The company releases its first earnings report since becoming a public company early November. The stock has gained close to 150% since then and is trading near $66 a share at midday.

Scott Kessler, analyst at S&P Capital IQ, tells The Daily Ticker: "People are focused more on opportunity and not on risk" when it comes to Twitter.

Related: Invest in Twitter? Don’t Even Think About It: Blodget

He has a "sell" rating on the stock with a $43 price target -- about a third below its current price.

"We have concerns about margins and profitability," says Kessler. He expects Twitter will report a per-share loss for the quarter due to "significant cost and operating expenses" but he did not say specify a number.

Related: Facebook turns 10: "The most important tech company of the past decade”

"This basically is a company that is not as big or successful as a lot of its competition," he adds. "Facebook (FB), Google (GOOG) and LinkedIn (LNKD) are all ahead of it."

Related: Losing Money Is “the Biggest Thing” Twitter Has Going For It, Blodget Says

So why is Twitter's tock price so high?

Kessler says two factors are contributing to the surge in Twitter's stock: retail and institutional investors are "chasing performance" and there's only a small amount of outstanding shares available for purchase.

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