Share of Users Who Never See Ads on Twitter (TWTR) Is Accelerating: Report

Twitter (TWTR) shares are trading lower in pre-market. The decline may be attributed to a Wall Street Journal report that indicates share of users who never see ads on Twitter is accelerating, while growth of those who do see ads is shrinking.

The publication notes that of the “271 million people counted in Twitter’s latest tally, 14%, or 37.9 million, never log in directly to Twitter’s website or mobile app, the only places where Twitter serves ads.” Instead, they connect through hundreds of thousands of third-party apps that the users have given permission to link to the microblogging site.

“Going forward you could see that there’s a chance—and recent history has proven this out—that this number [14%] could continue to grow, and what happens if it hits 25%?” Peter Stabler, an analyst at Wells Fargo (WFC), was quoted as saying to the Journal.

Despite Twitter’s strong earnings report late Tuesday that drove the company’s market value up by more than $3 billion this week, its shares currently seem richly valued. TWTR has a forward PE of 122.58 times projected earnings and a P/E to growth ratio of 4.39. Price/Sales for the t-12 period is at 27.64 while EPS is negative at (-2.50). Operating and profit margins are also negative at -87%.

Twitter has a market cap of $26.28 billion and is part of the Internet Information Providers industry. Shares are down 30.67% year-to-date as of the close of trading on Friday.

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