Shares of Twitter (TWTR) and Airbnb (ABNB) are in focus on Monday after Goldman named the stocks as its sell-rated names among the U.S. internet companies on which the firm rolled out new coverage.

SELECTIVELY POSITIVE: Goldman analyst Eric Sheridan initiated on the U.S. Internet sector with a "selectively positive" view. In a research note, Sheridan says he sees opportunities for investors to capture a mixture of growth, free cash flow dynamics, and capital allocation decisions that are increasingly equity value accretive. The analyst's Buy ratings are Amazon (AMZN), Facebook (FB), Alphabet (GOOGL), Snap (SNAP), Uber (UBER), Lyft (LYFT), and Expedia (EXPE), reflecting companies where he thinks the market is still under-appreciating the prospects for long-term compounded growth and/or longer-term operating margin structures as reflected in current valuation, Sheridan said.

The industry still has "ample opportunities" for secular revenue growth and increased operating efficiencies on the back of building scale in the coming years, Sheridan further stated.

SELL TWITTER: Goldman's Sheridan initiated coverage of Twitter with a Sell rating and a $60 price target. For Twitter, the analyst says an advertising recovery is priced into shares while the company's innovation is a "show me story." Rather than the usual categorization of Twitter as a social media platform, Sheridan views the company as more of a differentiated media/publishing platform and sees the main debate for Twitter being whether the company can either morph its core use case to appeal to a wider, more scaled audience base and/or execute against more niche monetization opportunities that align with the platform's current distribution.

Sheridan doesn't believe Twitter will achieve compound revenue growth at 20%+ per annum and thinks the company will fall short of its 2023 user and revenue goals laid out at its February 2021 Analyst Day. At the same time, he thinks Twitter can achieve a mid-teens GAAP EBIT margin over the long-term but sees earnings power capped by its investments.

SELL AIRBNB: Sheridan also initiated coverage of Airbnb with a Sell rating and $132 price target. Airbnb shares have a negative risk/reward skew when measured against the potential for a volatile travel environment ahead, a relatively mature end market, and high levels of competitive intensity among industry players, says the analyst. At the same time, Sheridan contends that the company is a strong player with a runway for growth and margin expansion in the coming years, and is currently benefiting from a strong industry rebound in the segment of global travel in which it leads.

He sees Airbnb generating a 2021-2026 revenue CAGR of 21%, a 2026 adjusted EBITDA margin of 32% vs. -5% in 2019, and a 2026 GAAP EBITDA margin of 19% vs. -8% in 2019. Sheridan sees the key debate around the stock being the shape/linearity of the online travel recovery post-pandemic & stickiness of consumer shifts in travel preferences.

PRICE ACTION: In morning trading, Twitter shares fell 4.6% to $58.73, while shares of Airbnb declined nearly 6% to $155.98.