Twitter Inc., (NYSE: TWTR) was trading at $19.85, down 0.10%, or – $0.02. However, the stock dropped approximately $2.60 to $17.27, down 13% in the pre-market trading session on Monday, 10 October. For the year-to-date, Twitter Inc., stock is down 14.22%. The stock enjoyed a purple patch between June 10, 2016 and October 5, 2016 when it soared to $24.87. In the past 5 days, the stock has lost $7 as traders are going short en masse. In fact, the 27.98% decline in the stock price in just 5 days is a shocking indictment of Twitter Inc. At current prices, the company is valued at $13.9 billion, with a price/earnings ratio of -32.97. There is no dividend or yield to speak of. The 52-week trading range for the stock is $13.73 on the low end and $31.87 on the high end. The 1-year estimate price is $16.52 – marginally lower than the prevailing price.

What about Earnings, Estimates and Revenues?

Despite its shock drop performance of late, Twitter Inc., has outpaced estimates for all 4 previous financial quarters. Consider the following data and how it impacts the stock’s performance:

• In Q3 2015, the actual earnings were $0.10 and the estimated earnings were $0.05.
• In Q4 2015, the actual earnings were $0.16 and the estimated earnings were $0.12.
• In Q1 2016, actual earnings of $0.15 were reported with estimated earnings of $0.10.
• In Q2 2016, actual earnings of $0.13 were reported with estimated earnings of $0.10.
• The next earnings date will be Thursday, October 27 and estimates are currently $0.09.

In terms of revenue and earnings, Twitter has consistently increased its revenues, while reducing its negative earnings year on year. For example, in 2013 revenue of $664.89 million was reported with earnings of $-645.32 million. In 2014, revenue of $1.4 billion was reported with earnings of $-577.82 million. In 2015, revenue of $2.22 billion was reported with earnings of $-521.03 million. The trend in all instances is clear: earnings are less negative while revenues are increasing. However, this does not bode well for recommendation trends for Twitter. Between July and October 2016, the number of hold ratings has increased while the number of strong buy or by options has decreased. On a scale of 1.0 (strong buy) to 5.0 (sell), Twitter is rated at 3.1.

How is Twitter Performing in Terms of Upgrades and Downgrades?

The last 5 major ratings upgrades/downgrades have all been negative for Twitter Inc. Consider the following upgrades & downgrades history:

• On 27 July 2016, Axiom Capital downgraded Twitter to a hold.
• On 18 August 2016, Evercore ISI downgraded Twitter to a sell.
• On 23 September 2016, RBC Capital Markets downgraded Twitter to an underperform.
• On 28 September 2016, Mizuho downgraded Twitter to an underperform rating.
• On 28 September 2016, Loop Capital downgraded Twitter from a hold to a sell rating.

Why did Companies Bail on Twitter?

Investors who are curious about all the negative publicity with Twitter need only consider the latest news about the company. What recently occurred is that all of the bidders intent on buying Twitter stock got cold feet and decided to bail out of any potential buyout of the company. The company most interested in purchasing Twitter was Salesforce, but it decided to renege on its buyout plans for Twitter. For example, Salesforce is worth an estimated $50 billion, and the buyout deal for Twitter would have cost upwards of $15 billion, with stock options. Investors and shareholders were reluctant to participate in such a costly deal.

As such, shareholders including Fidelity Inc., were none too pleased about the idea of a deal between Salesforce and Twitter. It should be remembered that Salesforce only has about $1 billion in cash on the books available, which means that the remainder of the deal would have to take place in the form of stock options. Disney was also bidding on a Twitter buyout, but they preferred their name to be kept secret. When it emerged that Disney was one of the bidders, they also got cold feet and walked away from the deal. When it comes to Google, there was mild interest, but it was never a serious offer to buy Twitter. As the world’s most popular microblogging platform, Twitter will invariably be bought out at some point in time, possibly not in October 2016. Already, Twitter rules the airwaves when it comes to the US presidential debates, NFL Super Bowls and other big news stories.

A buyer will come, the question is when and at what price.