Bad news for Twitter. According to the latest industry data, the microblogging giant is not the top dog among social networks in the race for social advertising dominance.
Cowen & Co. analyst John Blackledge noted in a new research report that Twitter’s ads aren’t performing as well as Facebook’s or even LinkedIn’s. And when it comes to keeping investors optimistic, this is anything but a promising sign.
“Twitter is a popular social platform, but shares are too rich in our view,” Blackledge observes.
Twitter’s IPO in November of last year priced shares at $26. One day removed from Christmas, the stock shot up to more than $74 per share. But it has not sustained the valuation.
Last week, the stock fell to $57.75. In response, Blackledge set his target price for Twitter at $32.
According to the analyst, fifty buyers were questioned about the effectiveness of Twitter’s ads. Only 5% said Twitter had the best return on their investment. Sixty percent said that Facebook ads perform best, followed by 25% giving the highest mark to LinkedIn.
“The data suggests the low ROI rating is tied to pricing, as respondents commented ‘high minimum ad spend’ and ‘cost of campaigns’ were negative points for Twitter’s advertising value proposition,” Blackledge reported.
The underwriter for Twitter’s IPO, Morgan Stanley, downgraded the stock to underweight earlier last week.