Back in early December, I was bullish on Twitter Inc (NYSE:TWTR) for three reasons when it was $50 and it has since rallied more than 40%. Today however, it seems the stock may have hit a bump in the road. In early trading shares have shed more than 5%. Analysts are putting “sell” ratings on the stock saying there was no justification for the recent rally.
So why did it rocket so high so fast and why is it now coming back to Earth?
First, the fundamental story is still an exciting one and Twitter will have an opportunity to create all kinds of value few yet foresee. For instance, with a constantly improving ability to crunch its massive real time data set, Twitter may have an opportunity to monetize search, which would be huge. I can imagine Twitter placing relavent geolocated ads next to its users’ searches for auctioned keywords similar to Google’s approach to traditional search.
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