Twitter Downgraded by MKM Partners
On Tuesday, MKM Partners downgraded Twitter Inc. (TWTR, +0.55%) from buy to neutral. This came as a result of the current search for a new CEO for Twitter which is likely to cause uncertainty. Added to this, it was said that the company is doing very little to address their stagnant user growth. According to analyst Rob Sanderson, Twitter has a lot of long term potential and if the micro-blogging site’s management executes effective strategies to increase and improve user engagement, the company has a significant upside. Earlier this month, Chris Sacca, who is well-known as the outspoken investor of Twitter, provided a few ideas on how Twitter can increase user growth while also stating that the company currently has ‘no catalyst for improving sentiment in the next two quarters’. According to Sanderson, if reports emerged of a potential buyout bid, this will positively impact Twitter. Last week, the current CEO of Twitter, Dick Costolo, announced that he would step down at the beginning of next month. In the interim, Jack Dorsey, the site's co-founder, will serve as the CEO until a suitable and permanent replacement is found. MKM Partners also gave a twelve month price target on Twitter’s stock at $39 yet they also added that the company’s valuation could reach $100 billion if emphasis was placed on improving the strategy for user growth. In pre-market trade, the shares of Twitter traded at $34.30, down 1.1% which put them on track to open at a 52-week low. Over the last 3 months, the shares of Twitter have declined more than 25 percent and as of close of trading on Monday, the company had a market capitalization of $22.7 billion.
In U.S. trading on Tuesday, U.S. stocks closed higher. This came as investors shifted their attention away from Greece and the unsuccessful debt talks and focused on the outcome of the Federal Reserve policy meeting which is taking place on Tuesday and Wednesday this week. Added to this, stronger than expected data on building permits also supported stocks. At the close of trading, the S&P 500 index (SPX) gained 0.6%, or 11.86 points, to 2,096.29. Also on the upside was the Nasdaq Composite index (COMP) which rose 0.5%, or 25.58 points, to 5,055.55 while the Dow Jones Industrial Average (DJIA) gained 0.6%, or 113.31 points, to 17,8904.48. According to a chief strategist at TD Ameritrade, J.J. Kinahan, the increase in stock prices among low trading volumes in a clear indication of cautious trading.
In forex trading on Tuesday, the U.S. dollar (USD) traded higher. This came in response to investor anticipation regarding the outcome of the Federal Reserve's monthly policy meeting which will be revealed today. Also, the Commerce Department in the U.S. reported that in May, the number of building permits issued increased from April’s total of 1.140 million, to 1.275 million units, up 11.8 percent. This beat analysts’ expectations for a decline of 3.5 percent to 1.100 million units in May. Also, data showed that in May, housing starts in the U.S. declined from April’s total of 1.165 million units to reach 1.036 million units in May, down 11.1 percent. The EUR/USD traded at 1.1232, down 0.47% while the GBP/USD traded at 1.5629, up 0.18%. Also, against the Australian dollar and the Japanese yen, the greenback traded mixed with AUD/USD down 0.12% to 0.7756 and with USD/JPY steady at 123.42. Also, the U.S. dollar index was at 95.35, up 0.31%.
On Wednesday, crude oil prices traded flat in early Asian trade. This came after industry data out of the U.S. showed a draw in crude oil and gasoline supplies last week. According to the API (American Petroleum Institute), last week, crude oil and gasoline inventories both fell by 2.9 million barrels. Today, investors will turn their attention the report on the same data by the EIA (Energy Information Administration). WTI crude oil for July delivery traded at $60.45 a barrel, up 0.01%, on the NYMEX. Also, on Tuesday, Brent crude oil for delivery in July traded at $63.71 a barrel, down 0.37%, or 0.24 cents, on the Intercontinental Exchange (ICE) in London.