Leading off our list is social media giant Twitter, which Goldman initiated with a sell rating on Wednesday.
Along with the bearish stance, Goldman analyst Eric Sheridan planted a price target of $60 on the shares, almost exactly where they sit today.
Sheridan has a generally positive view of the entire U.S. internet sector, suggesting that it still has plenty of room for long-term growth and operating efficiency improvement.
But in the case of Twitter, the analyst thinks its valuation is stretched and that the company’s innovation is largely a “show me story.”
Specifically, Sheridan isn’t entirely convinced that Twitter will be able to appeal to a wider audience base over time or capitalize on the more niche monetization opportunities that its current audience base presents.
In that sense, Sheridan feels that Twitter is more of a publishing platform than a social media platform like Facebook or Snap, which he both recommends as a buy.
Twitter shares slumped as much as 5% on Monday in response to Sheridan’s view.
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Next up, we have vacation rental leader Airbnb, which Sheridan also initiated with a sell rating yesterday. The analyst placed a price target of $132 on the stock, representing about 20% worth of downside from where it sits now.
Sheridan had some good things to say about Airbnb, calling the company a market leader in the space with attractive growth and margin expansion opportunities ahead of it.
In fact, the analyst expects compound annual revenue growth of 21% over the next five years and an adjusted profit margin of 32% in 2026. So for growth oriented investors, Airbnb might be worth purchasing using just your spare change.
But at the current valuation, Sheridan thinks Airbnb’s risk/reward tradeoff tilts negative due to the volatile travel environment going forward, a mature end market, and increasingly intense competition.
Airbnb shares quickly plunged 5% on Monday morning after Sheridan’s bearish call, but have largely recovered since.
Go your own way
There you have it: two popular tech stocks that Goldman Sachs recommends you sell today.
Instead of volatile high-profile Internet stocks, risk-averse investors might want to stick with more stable, inflation-proof assets instead.
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