Goldman Sachs downgraded Twitter on the back of the social media company's dismal earnings performance on Thursday.
The firm downgraded the stock to neutral from buy and slashed its price target to $34 from $52. Goldman also lowered its 2019, 2020 and 2021 earnings estimates to "reflect the company's advertising issues."
"The lack of visibility into the remediation of the advertising platform, uncertainty around Twitter's ability to drive broader advertiser demand, and the risk of further multiple compression drive us to lower our rating to Neutral," Goldman's Heath Terry said in a note to clients.
Shares of Jack Dorsey-led Twitter plunged 20.8% on Thursday as product issues and lower-than-expected advertising "headwinds" weighed on third-quarter results. Advertising revenue only grew 11%, compared with 29% in the second quarter and product bugs negatively impacted ad pricing.
Twitter reported earnings of 17 cents per share on revenue of $823.7 million, while Wall Street was forecasting earnings of 20 cents per share on revenue of $874.0 million, according to Refinitiv.
Goldman now forecasts 2019 year-end earnings of $1.87 per share, down from $1.98 per share, and revenue of $3.459 billion, down from from $3.612 billion.
Despite the downgrade, Terry said Goldman continues to see significant and growing value for Twitter, demonstrated by "broad-based, accelerating DAU growth."
Twitter reported 145 million monetizable daily active users for the third quarter, a new metric to measure the daily active users who are shown ads on the platform.
— With reporting from CNBC's Michael Bloom.