Twitter Drops 13% on the Day

Twitter (TWTR) stocks dropped by 13% today after the stocks were downgraded from neutral to overvalued by Macquarie Capital on Friday. Twitter stocks closed at $63.75 Friday, which is still way up from their IPO price of $26 and opening price of over $45 back in November.

What does this mean for you?

You should avoid twitter like a plague. Shares of twitter are extremely overvalued for a company that has yet to turn a profit. In addition, the price to book ratio and price to sales ratio are 56.5 and 61.7 respectively, compared to industry averages of 5.7 and 7.4 in those same metrics. While the company has a bright future, you should wait for the share prices to come way down before you even consider purchasing a stake the social media network.

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