Q: Can I make money on Twitter?
A: Twitter is struggling to find its reason to be. Investors will need to be patient in the meantime.
Shares of Twitter have been a point of pain for investors this year, with shares dropping 14%. Twitter’s latest quarter didn’t do much to inspire confidence in the company, which allows users to sent out short messages to each other. Results during the third quarter actually came in double what Wall Street analyts expected. But the problem is the company’s future. Analysts now expect the company to earn just 12 cents a share in the fourth quarter, which is 36% lower than what was called for six months ago. Twitter struggles showing mainstream online users why it’s worth the trouble.
Wall Street analysts continue to think Twitter still have a future, it’s just going to take longer to become clear. Shares of Twitter are rated “outperform” and analysts think the stock could be worth $34.31 each in 18 months. If correct, that would be nearly 12% upside from the stock’s current stock price of around $31 a share. But Twitter remains a highly risky stock that’s only for investors able to lose money. New Constructs, which compares the stock price to the present value of expected cash flows, rates the stock “dangerous.” It’s a speculative bet for investors willing to take a big chance.
USA TODAY markets reporter Matt Krantz answers a different reader question every weekday. To submit a question, e-mail Matt at email@example.com or on Twitter @mattkrantz.
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