Wedbush Raises Red Flags on Twitter Inc (TWTR) Amid COO’s Sudden Departure

Twitter Inc (NYSE:TWTR) shares were on a 4% dip after announcing Wednesday, November 9th that COO Adam Bain is stepping down from his role with present CFO Anthony Noto set to take over the position. Why is Mr. Bain suddenly leaving the company after first joining in 2010, a significant backing power to the development of the company’s advertising and monetization? Any specific reason is presently unknown.

For Wedbush analyst Michael Pachter, this change in power “leaves a gap and highlights uncertain future ahead” for the social networking giant. It is worthy of note that in stepping away from the CFO role to fill the vacancy, Mr. Noto’s position is now left gaping open until a new CFO can be appointed. As such, the analyst remains cautious and therefore reiterates a Neutral rating on TWTR with a price target of $14, which represents just under a 24% downside from where the shares last closed.

Pachter asserts, “The COO departure leaves a gap in operational expertise and underscores an indefinite path forward for the company. We respect Mr. Noto immensely, but note that his operations experience at the C level is limited to his experience at the NFL. Twitter is a challenged company with stalled user growth, and while we think Mr. Noto is capable of keeping the ship on its current course, we question whether his promotion to COO will cause the ship to change course.”

Ultimately, “In our view, Twitter needs a substantial change in its user interface, needs to convince non-users of the value of its service, and needs to convince a substantially greater number of advertisers that they can derive value from reaching Twitter’s audience. We thought that Mr. Bain was succeeding at the last of these, but we saw no progress on the first two. It is not clear to us that Mr. Noto will make any more progress than his predecessor made,” Pachter concludes.

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, analyst Michael Pachter is ranked #3,891 out of 4,200 analysts. Pachter has a 46% success rate and faces a loss of 4.1% in his yearly returns. When recommending TWTR, Pachter earns 0.0% in average profits on the stock.

TipRanks analytics exhibit TWTR as a Hold. Based on 28 analysts polled in the last 3 months, 5 rate a Buy on TWTR, 17 maintain a Hold, while 6 issue a Sell. The 12-month price target stands at $17.68, marking a nearly 4% downside from where the stock is currently trading.screen-shot-11-11-16-at-03-13-pm

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