Morgan Stanley (NYSE: MS) analysts are bearish on Twitter (NYSE: TWTR), saying that the social media company had slower growth in new users, revenue and earnings even though it won the bid of NFL deal.
Morgan Stanley analyst Brian Nowak lower the target price of Twitter to $16 a share from $18. He also cut the projection of earnings before interest, tax, depreciation and amortization by 13 percent to $769 million for 2017.
Nowak mentioned that the main problem of Twitter was slow new users growth and declining engagement. Time spent per U.S. mobile user on Twitter fell by an estimated 10 percent in the first quarter of 2016 from a year earlier. The new mobile-app downloads were flat for the second straight quarter.
Twitter had been struggling to gain new users in the recent year. In most recent quarter, twitter only added 320 million new users, which fell short of analysts’ estimates. While its rival Facebook reported 1.59 billion monthly active users in the last quarter of 2015.
“We see fewer users and less time per user holding back Twitter’s platform monetization — putting a limit on ad impression growth and holding back the pace at which advertisers increase their share of ad budgets toward the (shrinking) platform,” the analysts wrote.
Twitter announced this week that it signed a deal to stream U.S. National Football League games beginning this fall. It won the deal by beating other bidders including Verizon, Amazon, Yahoo, and Facebook. The company expects the deal would help increase advertising revenue and users. But analysts are still not optimistic in the future of the company.
Twitter shares closed at $16.97 on Thursday.