At one point, investors thought Twitter Inc (NYSE:TWTR) had a legitimate shot at disrupting social media behemoth Facebook Inc’s (NASDAQ:FB) dominance. Priced near $50 per share in early 2015, TWTR stock has since fallen back to its current value of around $17 as a grim reality has sunk in… Twitter isn’t a significant threat to Facebook, and probably never will be.
Instead, investors have shifted their focus on inevitable comparisons between Facebook and relative newcomer Snap Inc (NYSE:SNAP) — the parent company of Snapchat. Most have overwhelmingly pegged Snap as the loser of that two-horse race, at the very least Snapchat has the honor of being selected as the name for Facebook to beat.
That’s a pretty big deal for Twitter stock, all things considered.
The pullback from TWTR stock isn’t in itself the alarming problem, however. It’s just a symptom.
It’s the “why” Twitter stock can’t pick itself up off the mat that should gnaw at current and would-be owners. In short, the market is starting to leave Twitter for dead, ignoring it, cutting off the prospect of the attention it sorely needs.
Waning Interest in Twitter Stock
The underpinnings are pretty well documented and don’t need a great deal of detailing. Although revenue is growing for TWTR, the pace of that growth is slowing down, and user growth is essentially at a standstill. Such has been the case for a few quarters now.
And that grinding slowdown has gradually chipped away not just at the TWTR stock price, but at the market’s interest in Twitter altogether.
The chart below tells part of the tale, logging the numbers of times Twitter stock as an investment has been discussed on social media platforms. The buzz peaked in September of last year, right around the time the microblogging platform found a little success with sports broadcasting and painted a compelling picture of a turnaround built on video. In fact, Twitter was on such a compelling turnaround track that companies like Apple Inc. (NASDAQ:AAPL) and Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) were rumored to be mulling an outright acquisition.
But the hype for TWTR stock didn’t last.
When none of the alleged bidders put an offer on the table, most of the last, lingering hopes for TWTR stock were dashed. That’s when the investment community lost interest. Interest hasn’t recovered in the meantime.
And it’s not just the amateurs that debate stocks on Twitter and Facebook that are giving up on the company altogether. The pros are too. The number of analysts that maintain any kind of rating on TWTR stock has fallen from a peak of 45 in May 2016 to only 37 analysts now.
Granted, the eyes of 37 pros is still a lot, but the fact that the number is trending lower for a story stock like Twitter is telling in itself — analysts love to talk about story stocks like Twitter. Never even mind the fact that of the analysts still keeping tabs on the company, the opinions of TWTR stock are increasingly grim. Its current average rating of “Hold” and overall opinion score of 3.4 is almost as bearish as it has ever been, and it too is trending downward.
Bottom Line for TWTR Stock
This isn’t to suggest Twitter could never dig its way out of a hole and start to reward shareholders again. It may well do it. It is to suggest, however, that if it’s going to do that it doesn’t just have a fundamentally based mountain to climb. It’s also got a bigger mountain to climb in the form of getting the market’s attention again.
Better results will help to some degree on that front, but it’s going to take a massive amount of work to light a fire under TWTR stock. The market has already lost interest; Twitter has used up the bulk of its goodwill and investor patience. Investors aren’t quick to take a second look at a stock that has burned them in the past.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on (ironically) Twitter.
