Another management shakeup is not what Twitter needs, said UBS analyst


Mahaney: Twitter's video ad problem likely to intensify

Some investors are calling on Twitter CEO Jack Dorsey — who is also CEO of Square — to stop juggling two jobs and focus on struggling Twitter. But any major change at the top of Twitter right now would likely push the company's turnaround even further, said UBS analyst Eric Sheridan.

Bringing in a new regime to run the company, while trying to compete in the fierce digital ad dollar market, could push Twitter's turnaround out past 2018, he said.

"No one thinks that's the best solution here but the opposite — making another change — also doesn't seem like good solution," said Sheridan.

Twitter posted fourth-quarter earnings of 16 cents per share, beating analyst estimates by four cents per share, but reported $717 million in quarterly revenue which fell short of the $740.1 million analysts had expected.

The company saw its slowest quarterly revenue growth since going public and gave a current quarter adjusted earnings outlook that fell well short of analyst forecasts. The stock traded down 10 percent Thursday, hitting a low of $16.53.

Twitter has been unable to soak up ad dollars at the rate investors had hoped for and is not innovating at the same rate as rivals Facebook and Alphabet's Google, said Sheridan. UBS has a neutral rating on the stock and a $18 price target.

"Facebook and Google are going to continue to grow at very fast rates and continue to innovate and I think that would leave Twitter far behind at this point," he said.

Twitter is facing much more competitive pressure for video ad dollars and revenue will continue to decline this year, said RBC Capital Markets analyst Mark Mahaney.

"That problem is probably going to intensify," said Mahaney. RBC has a sell rating on the stock and a $17.61 price target. "Whether they can get out of that spiral is unknown."