Twitter's big improvements are 'already priced in'
- Twitter shares may be topping out, according to Macquarie analyst Ben Schachter.
- The stock has soared this year, and all of Twitter's strategy and product improvements are priced in, he says.
- Plus, there isn't a new catalyst that will drive further gains for the moment.
- Watch Twitter trade in real time here.
Twitter has quietly been one of the best performing US stocks this year. It's up more than 80% this year, but has flown under the radar because of the big gains from tech giants Netflix and Amazon.
As Twitter has returned to executing its strength of being a hub for quick, real-time conversation, the improvements it's needed to make are largely baked into its stock.
"With the stock up almost 50% since late April, we think most of these factors are priced in," Macquarie analyst Ben Schachter wrote in a note out to clients.
One of the improvements Twitter has made is understanding where in the internet landscape it's competitive. Facebook is dominant as a social-media platform for all types of interaction, but Twitter can be good at engaging users for quicker more current conversations.
"The company is executing better and is clearly more focused on its role as a place for real-time conversation and less on trying to be all things to all people," Schachter wrote.
Ans a Goldman Sachs note out in earlier in July pointed out Twitter's ongoing focus on product improvement. "Twitter continues to focus on the relevance of its product for its core user base, particularly on video," analyst Heath Terry wrote.
Even though Schachter raised his price target from $36 a share to $42, he still downgraded the stock from "buy" to "neutral," adding that a "key challenge for Twitter (and a key reason for our downgrade) is Twitter's inability to grow MAU meaningfully."
