Wedbush Cautious on Twitter Inc (TWTR) Until CEO Jack Dorsey Addresses Challenges


Wedbush analyst Michael Pachter is out with a research report on Twitter Inc (NYSE:TWTR) exploring the implications to shareholders of CEO Jack Dorsey as he endeavors to be in two places at once, leading both the social media titan as well as mobile payments company Square. Pachter’s verdict? “Mr. Dorsey is needed more at Twitter,” the analyst deduces.

As such, Pachter reiterates a Neutral rating on shares of TWTR with a $14 price target, which implies a just under 28% downside from current levels.

Both of Dorsey’s companies have become publicly traded. Yet, ever since this transition, shares for Twitter and Square have underclassed the market on the whole. Though Dorsey has brought in positive features like Moments, streaming video, and NFL game broadcasts, there are problems that remain unresolved.

From the analyst’s standpoint, “We continue to believe Twitter has several problems that appear to remain unaddressed. […]  the site has not seen a meaningful increase in the rate of user growth over the past year.” Moreover, Pachter believes TWTR’s challenges stem from a variety of problems plaguing the platform, from a service and interface that could stand to be more user friendly to a help function that he dismisses as both “unhelpful and hard,” as well as “an often hostile and anonymous forum, a lack of a clear mission, and stalled user growth.”

Moving forward, the analyst underscores, “We think that the ‘fix’ for Twitter is to exploit events where interesting people (such as President Elect Trump) use the forum to air interesting views. Unfortunately, we see little evidence that Mr. Dorsey is either aware of any of these problems or is taking steps to address them. Until he does, we are not optimistic that Twitter shares can appreciate meaningfully.”

“Where should Mr. Dorsey go? We see the challenge and opportunity at Twitter as greater than that at Square, and considering Square’s deeper bench, we believe Mr. Dorsey would have a greater impact committing full time to Twitter,” Pachter contends.

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, Michael Pachter is ranked #3,982 out of 4,269 analysts. Pachter has a 47% success rate and loses 3.8% in his annual returns. When suggesting TWTR, Pachter earns 0.0% in average profits on the stock.

TipRanks analytics demonstrate TWTR as a Hold. Out of 28 analysts polled in the last 3 months, 5 are bullish on Twitter stock, 17 remain sidelined, and 6 are bearish on the stock. With a loss potential of nearly 10%, the stock’s consensus target price stands at $17.53.