Twitter (TWTR) stock has dipped since co-founder Jack Dorsey stepped down as CEO on Monday.
It’s not great news to hear about a CEO stepping down. The news is harder to take when the CEO is a legendary founder at a time when the stock is in the midst of a vicious decline.
Shares of TWTR are down 16.5% year-to-date. While Dorsey’s step down may need more time for investors to digest, the news should not have been too much of a surprise, given Dorsey is also the top boss over at fintech firm Square (SQ). It’s already hard enough to be the CEO of one technology titan, let alone two.
For now, financial technology is where Dorsey wants to focus his time. Unfortunately for Twitter, Dorsey’s shift of focus could exacerbate the decline in the stock, which already has its fair share of baggage.
For that reason, I continue to be bearish on Twitter stock, even after its sizeable decline. (See Analysts’ Top Stocks on TipRanks)
New CEO
CTO Parag Argawal is set to take the reins from Dorsey. With around 10 years at the firm, Argawal certainly seems to be the right man for the job, or at least the next-best thing to Dorsey. Sure, Dorsey’s departure makes Twitter stock even tougher to get behind, but the firm seems to be in very good hands.
Further, having one man focusing all of his efforts at the helm of Twitter may actually be good news over the long term. While Dorsey is one of the most brilliant minds in the tech scene, Twitter is a company that needs 100% of one’s focus if it’s to take its growth to the next level. Undoubtedly, the $36.4-billion company still has room to the upside.
Could Subscriptions Beef Up Top-Line Growth?
With new subscription-based offerings such as Twitter Blue, the firm has an intriguing means to further monetize its existing userbase, with the inclusion of added features like undoing Tweets and bookmarking folders. User growth has shown signs of fading in recent quarters, so such initiatives should help complement the firm’s solid ad revenues and help put a bottom in the stock.
Twitter Blue seems promising, but the company may need to add more features and functionality if the subscription is to have a value proposition that would better cater to a broader range of audiences. With fierce competition in the social media space, Twitter needs to introduce new free features.
Twitter’s Explore tab has shown some success in beefing up user engagement. Still, it remains unclear how Twitter can really awe investors, as users may spend less time on Twitter once the metaverse finally arrives, with new ways of interacting.
Wall Street’s Take
According to TipRanks’ analyst rating consensus, TWTR stock comes in as a Hold. Out of 21 analyst ratings, there are four Buy recommendations, 15 Hold recommendations, and two Sell recommendations.
The average Twitter price target is $68.68. Analyst price targets range from a low of $47 per share to a high of $86 per share.
Disclosure: Joey Frenette doesn’t own shares of any mentioned companies at the time of publication.
Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates Read full disclaimer >
