Recently, Facebook (NASDAQ) has been the most talked about social media stock.

Although Facebook shares have suffered the brunt, selling pressure could spread to Twitter (NYSE) where the shares may look even more expensive.

Anxiety is building against the social media company. I will be watching from the sidelines, with my name on it.

TWTR stock is a top pick of my bearishness. (See Analysts’ Top Stocks on TipRanks)

Hot Ad Growth, Regulative Risks

Twitter has seen remarkable ad growth in recent months. Twitter has over 150 millions users. It has an extraordinary and unmatched ability to harness its network effect as it enters the ad industry.

The company is moving closer to profitability through ad growth as well as its Twitter Blue subscription service. This has been tested in Canada and Australia. A sustained push into green seems possible.

Facebook is attracting more attention and there may be some significant roadblocks. Facebook may have many negative characteristics that aren’t unique to it, but they could also be common in the wider industry.

Investors should expect a lot of uncertainty in regulatory matters and stiff penalties, such as those imposed by Chinese regulators on technology companies. Alibaba (NYSE:

Twitter’s growth is explosive, but it also faces regulatory challenges. The company may make big in digital advertising over the next decade. However, it is difficult to support the valuation in a moment when many social media CEOs are due for additional hearings before Congress.

Are there ripple effects of Facebook’s recent backlash spreading across the sector?

You can do it. Given the current slate of risk factors, it’s likely that valuations for some of the more volatile social media stocks, such as Twitter, may need to be reset.

Stock of TWTR is Not Affordable

TWTR shares trade at over 8x sales and more than 64.4x trailing earnings.

The company could continue its push to the green in the future with digital ads and Twitter blue. But investors might underestimate the immediate impact of any legislative action beyond Facebook.

Twitter could join other tech giants, such as Google and Microsoft, if ad revenue growth accelerates by 87% as it did in the second quarter.

Wall Street Take

TipRanks analyst consensus rate TWTR stock as a Strong buy. Six Buy recommendations are included out of the 23 available analyst ratings. There are 13 Hold recommendations and four sell recommendations.

As for price targets, the average Twitter price target is $71.38. Price targets of analysts can range anywhere from $33 per Share to $90 Per Share.

Bottom line

Although Twitter offers some very exciting growth opportunities, you will have to fork out $64 per share to get them.

It may be a good idea to listen to the consensus opinion at this moment, as there are more Sell and Hold ratings than Buy ratings for the name.

Disclosure: Joey Frenette is not a shareholder in any of the mentioned companies at publication.

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