Twitter Inc. (NYSE: TWTR) shares were crushed on Thursday after the infamous short firm Citron called the firm the “Harvey Weinstein of Social Media.”
Citron believes that while Wall Street has been focused on Facebook, Twitter poses more problems. The short firm believes that Twitter has become uninvestable and advertisers will soon be forced to take a hard look at all sponsorships with Twitter.
This view is based on a recent report from Amnesty International that concluded Twitter is an abuser of human rights and has become a place that is “toxic” for women, noting that women are abused every 30 seconds on the platform. The study focused on 800 female journalists and politicians to show the culture of hate that underpins Twitter.
According to Citron:
As an investor, if you dislike Facebook you must absolutely HATE Twitter. Beyond the recent findings of Amnesty International, Twitter is subject to the same concerns over privacy regulation.
Remember, Twitter has a business segment dedicated to selling user data. Last quarter, Twitter generated $108 million from data licensing of their users. If you assume 100% margin on Twitter’s data licensing business, this segment alone accounts for almost 80% of total profits!
Based on 2019 price-to-earnings multiples from direct competitors like Facebook (15.1 times) or Alphabet (13.1 times), Twitter’s valuation would be $15.93 or $17.68, respectively. As a result, Citron is issuing a price target of $20 for Twitter’s stock.
Shares of Twitter were last seen down about 12% at $28.86, with a consensus analyst price target of $34.60. The 52-week trading range is $22.04 to $47.79.