One of the banks that floated Twitter on the New York Stock Exchange has stunned Wall Street by warning of an “unattractive valuation” and rated the stock to “underperform” rating on the shares.
Bank of America Merrill Lynch set a target price of $36 — well below Twitter’s present share price of $40.78, although the stock remains far above last month’s $26 debut.
It is unusual for banks involved in a float to cast doubt on a company so soon after its debut. Five banks that worked on the November 7 float have published their independent views for the first time after a regulatory period of silence elapsed.
Morgan Stanley and JPMorgan saw little chance of Twitter’s stock rising in the short term as they rated it as the equivalent of a “hold”.
Only Goldman Sachs and Deutsche Bank recommended buying the stock.
Twitter is loss-making but the shares rocketed 70 per cent on their debut, briefly touching $50, and it is valued at $22 billion (£13.39 billion).
In a sign of Twitter’s appeal, Apple has spent a reported $200 million to buy US analytics company Topsy, which specialises in finding “social insight” and has access to Twitter’s so-called “fire hose” of internal data. British-born Duncan Greatwood heads Topsy, which was founded in 2006.