It’s been a long year for Twitter Inc TWTR shareholders, and the stock has started off 2016 by plummeting to new all-time lows. Unfortunately, Global Equities Research’s Trip Chowdhry predicts that the worst is not over for the battered social media giant.
“The capital markets cannot support existing Junk, as they have to make space for some new Total Junk, that is waiting, like SnapChat and Pinterest. The fair value of TWTR is about 1x Revenues, which we think, when all is said and done, TWTR may be a $5 stock,” Chowdhry said in an email to clients.
Related Link: How To Invest In The Digital Age With The 'Internet Titans' ETF
In addition to Twitter, he names several other “Total Junk” stocks in the email, including GoPro Inc GPRO, Fitbit Inc FIT, Groupon Inc GRPN, Zynga Inc ZNGA, Etsy Inc ETSY, Pure Storage Inc PSTG and Box Inc BOX.
Now that interest rates have started rising, Chowdhry believes that the money behind these “faddish” stocks will dry up and many will struggle to generate growth in the new environment.
Disclosure: the author holds no position in the stocks mentioned.
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