Twitter in the News
It was revealed on October 7th that Twitter (NYSE: TWTR) will be suing the US government for the right to disclose more detailed information on government surveillance of its users. The lawsuit claims that the Justice Department and the Federal Bureau of Investigation are restricting the company from disclosing the government’s national security requests for user data, thus violating its first amendment rights. Twitter is seeking the right to publish the number and type of government requests it receives for user information in more specifics. Ben Lee, Twitter’s legal counsel, said in a statement, “Our ability to speak has been restricted by laws that prohibit and even criminalize a service provider like us from disclosing the exact number of national security letters and Foreign Intelligence Surveillance Act court orders received—even if that number is zero,”
A Financial Expert’s Opinion
On October 7th, Deutsche Bank analyst Ross Sandler reiterated a Buy rating on Twitter with a $60 price target. He noted, “In summary, while some of the renewed confidence is starting to be priced into TWTR shares since 2Q results, we remain in the bull camp and see it as one of the best ways for investors to play the rapid growth in mobile.” Sandler has rated Twitter six times, earning an 83% success rate recommending the stock.
Ross Sandler’s Past Recommendations
Sandler has a history of rating internet companies, such as Facebook (FB) and Google (GOOGL), helping him earn an overall success rate of 61% recommending stocks and a +13.1% average return.
On September 26th of this year, Sandler reaffirmed a Buy rating on Facebook with a $90 price target following the company’s massive growth this year. He noted, “Facebook’s ascendancy in the past 12-months to $200B+ market capitalization has been based primarily on advertising revenue, and we believe the next $200B is going to have to involve a number of new business models, including payments. There are an estimated 1 billion people who have mobile phones that don’t have bank accounts globally, and the overlap with FB’s user base is broad, which we view as a key change-agent.” Sandler has rated Facebook 15 times, earning a 93% success rate recommending the stock.
Similarly on July 11th, Sandler reiterated a Buy rating on Google with a $625 price target. He explained, “Heading into 2Q14 results we continue to view Google as a must-own name for any consumer internet portfolio. The announcements coming out of i/o cement Google’s leadership in the ecosystem race ahead of Apple, Amazon and Facebook. 2Q14 should see margins start to stabilize (gross and EBITDA) y/y for the first time in several years, and in-line revenue (DB +2.3% Q/Q for net), both largely baked into consensus estimates. In summary, at 20x 2015 EPS and with arguably the best fundamentals in the sector and a better financial profile post-MMI, we continue to view the risk/reward as favorable.” Sandler has rated Google 21 times, earning an 81% success rate recommending the stock.
However, Sandler has not always been correct with his recommendations. On February 27th of this year, Sandler reiterated a Buy rating on Groupon (GRPN) with a $12 price target. He reasoned, “We recently spent time with GRPN management and came away feeling a lot better about interpretation of the mixed 4Q, and overall trends heading into 2014. GRPN is facing headwinds in NA as it shifts its inventory from urgent-expiration to perpetual-marketplace deals. This transition should continue for a couple more quarters (started to impact in 3Q13), but we get the sense that 1Q is re-accelerating, despite some of the noise coming from 3P data tracking. Importantly, the bear case that everything is falling apart is not valid looking objectively at strong EMEA performance in 4Q.” Sandler has rated Groupon ten times, earning a 22% success rate recommending the stock.