Elon Musk's Twitter fans find value analysts don’t see
Elon Musk and an army of individual investors are now going head-to-head with Wall Street analysts in a contest over Twitter Inc. Retail investors helped fuel record trading volume Monday for Twitter, with more than 260 million shares changing hands, after Musk disclosed a 9.2% stake in the social-media company. Twitter ranked as the most purchased stock by Fidelity Investments customers as the stock had its biggest rally since the day the company went public in 2013.
Analysts have been skeptical: They’ve slashed their aggregate price target by more than a third since October and just 10 of the 42 brokerages tracked by Bloomberg that cover the stock recommend buying it. The shares have tumbled from their 2021 record as investors balked at a combination of a high valuation and potentially disappointing user growth.
Buyers are betting the Tesla Inc. CEO can jumpstart Twitter by virtue of his clout as the biggest shareholder and as an influential user on the company’s platform, where he has 80.4 million followers. For now, though, they’re buying on faith.
“We need to know how active he’s going to be,” Alec Young, macro investment strategist at quantitative-research firm Mapsignals, said by phone. “Does he have a vision for the company? We’re not aware of that right now, and how active he is will make a huge difference for the stock. The stock has been sort of left for dead and analysts are lukewarm on it.”
Before Musk’s ownership disclosure on Monday, Twitter had tumbled over the past year as Covid-19 lockdowns eased and investors prepared for the end of easy-money policies from the Federal Reserve.
Monday’s 27% surge is “a potential over-reaction” given that it’s not clear why Musk made his investment, the stock is expensive
Read more on tech.hindustantimes.com
