Twitter Inc (TWTR): What’s Next For The Stock In 2014


Tara Clarke: Twitter Inc stock (NYSE:TWTR) was up more than 4.5% on Tuesday morning after the microblogging company announced it appointed former Goldman Sachs (NYSE: GS) banker Anthony Noto as chief financial officer.

The news comes less than three weeks afterTwitter’s June 12 management shake-up, when Chief Operating Officer Ali Rowghani resigned his position and shifted into a strategic advisor role.

The day Rowghani resigned, Twitter stock shot up 3.52%.

With Twitter stock down more than 32% year to date, the appointment of Noto and the continued trend of a management shake-up is a clear signal that the company is trying to right the ship.

Here’s why Noto’s appointment will help Twitter – and its stock – regain footing.

TWTR’s Bullish Management Makeover

Noto was managing director in the technology, media, and telecom investment banking division of Goldman Sachs. He’s responsible for leading TWTR’s IPO, and also helped to secure the Yelp (NYSE: YELP) IPO in 2012.

“He definitely understands Wall Street, how investors value the company, what investors are focused on,” CRT Capital Group LLC analyst Neil Doshi said to Bloomberg. “Twitter has done a fantastic job in posting very good financial results, but they missed the mark on how important investors view the user growth at Twitter.”

Doshi is referring to Twitter’s troubling Q1 2014 earnings report on April 29. It revealed that monthly active users (MAUs) – the lifeblood of Twitter – were lackluster, with only a 6% gain since last quarter. And the previous quarter saw only a 3% growth in MAUs. The report also showed that TWTR’s net loss grew by more than $100 million. Twitter stock fell more than 8% that day.

“Hopefully Mr. Noto will be able to help craft a better message for investors, how Twitter plans to grow and build from its current user base,” Doshi said. He rates Twitter the equivalent of a “Hold.”

Noto’s background looks like a promising fit for Twitter on paper.

Prior to joining Goldman in 1999, Noto served as CFO of the National Football League for almost three years.

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