Twitter Is Still Facing the Fallout From Banning Trump. Here’s the Latest Call From Wall Street.

By Max A. Cherney
Jan. 12, 2021


A day after a single demonstrator picketed Twitter’s empty San Francisco headquarters over barring President Donald Trump from the platform, Wall Street continues to weigh in on what it means for the stock.

Potentially unlike other social networks such as Facebook (ticker: FB), and Snap (SNAP), Twitter (TWTR) has exposed itself to a significant financial risk by blocking Trump’s account and removing his tweets. Shares fell for the fifth consecutive trading day on Tuesday, retreating 2.9% to $46.81 by early afternoon. The stock has declined 12% since the deadly assault on the U.S. Capitol last week.

The financial risk is related to Trump’s big audience on the platform. The president began his term in office with roughly 15 million followers, which swelled to nearly 90 million by the time Twitter banned the account.

Rosenblatt Securities analyst Mark Zgutowicz explained the issue in a note to clients. In short, Trump’s 88 million followers on the platform generate an enormous amount of engagement on both sides of the political aisle. All that helps to sell ads.

Zgutowicz wrote the Trump account receives an average of four million mentions a day, which spiked to 16 million mentions two days before the suspension. Zgutowicz estimated that about 30 million of those followers are daily Twitter users.

Without the engagement with the Trump account, the company risks jettisoning between six and nine million Twitter members who use the site every day, a loss that will cost Twitter, Zgutowicz wrote. While acknowledging that the calculation is not an exact science, the analyst’s team now models full-year 2021 ad sales of $3.28 billion, well below the consensus estimate of $3.83 billion.

Zgutowicz cautioned that his estimates and analysis don’t include non-Trump followers. He lowered his target price to $39 from $40.

Overall, Wall Street isn’t very excited about Twitter stock at the moment. Of the 38 analysts that cover the name, 61% have the equivalent of a Hold rating, while 26% have a Buy. The mean target for the stock price is $48.85, which represents a potential gain of about 4%.

Twitter stock has returned 44% in the past year, compared with 18% for the S&P 500 index.


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