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'Now seems to be an especially opportune time to sell Twitter' says MoffettNathanson

Pamela Granda
·Producer

Shares of Twitter (TWTR) ended lower on Thursday, after a bearish call from analysts at MoffettNathanson. In a note to investors, Michael Nathanson and Benne Rosner wrote that now seems to be an especially opportune time to sell Twitter.

“Just based on the math, Twitter is approaching difficult top-line comps given the sharp recovery in its U.S. business in 3Q 2018. As revenue growth is set to decelerate, cost growth is also expected to ramp,” they wrote.

Another key concern, they note, is that Twitter isn’t spending enough on safety and security, especially when compared to other social media platforms such as Facebook (FB) and Google’s parent company, Alphabet (GOOGL). Just this week, the House Judiciary committee kicked off an antitrust investigation on the impact of big tech on a free and diverse press.

To put things into perspective, Nathanson and Rosner pointed out that Facebook now has seven times as many people working on safety and security than Twitter does across its entire organization.

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“Unlike Facebook and its CEO Mark Zuckerberg, who seem to be perpetually in the glare of politicians and regulators, Twitter has managed to just skate on by,” they said. “Twitter still does not seem to be doing enough to secure its platform, while its valuation remains as stretched as ever.”

Looking ahead to the rest of the year, MoffettNathanson expects the company to give weak third-quarter guidance, given current revenue and cost pressures. It is set to report quarterly results on July 26.

Twitter shares, up 26.4% for the year, have outperformed the broader market, with the S&P 500 (^GSPC) having gained 15.35%.

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Pamela Granda is a producer on Yahoo Finance’s closing bell show, The Final Round. Follow her on Twitter.

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