Twitter's multi-billion dollar stock valuation plummeted yesterday after an analyst firm called Citron Research - run by "activist" short seller Andrew Left - claimed that it is "most vulnerable to privacy regulation".
Shares in the social media company fell by as much as five per cent after the research firm sent out a tweet making the claim.
The company's stock had already been trending down following the furore over Facebook and Cambridge Analytica, but Citron's claims sent Twitter's shares tumbling.
The company had claimed: "Near-Term target $25. Of all social media, they are most vulnerable to privacy regulation. Wait until Senate finds out what Citron has published."
Citron Research has also reduced the value of Twitter's shares from "long position" to "short position", which essentially means that it doubts the company even has a future as an independent entity.
The claims were made after it was claimed that London-based marketing company Cambridge Analytica gained unauthorised access to the personal data of 50 million Facebook users, taking advantage of broad permissions in an app for the platform that ostensibly was for academic purposes.
Facebook continues to face pressure from governments, consumers, regulators and investors globally, and its stock has also tumbled in response.
However, Citron believes that Twitter would be impacted by privacy regulations more than Facebook. This is because it makes a lot of money from selling data to third-parties, claimed the firm.
Citron claimed: "Twitter will generate $400 million this year by just selling user data. Not advertising."
However, it did not explain how it came up with this statistic.
It added that company insiders have "sold/surrendered almost $300 million of stock" and that the "last time there was this much insider selling was in 2015 when the stock was $50 and then preceded to fall to $14 over the next year".
The company believes that social media advertising is continuing to wane and that profits decreased significantly in 2017. But data reselling has not been affected.
"In 2017, ad revenue declined to $2.11 billion from $2.25 billion in the prior year while data licensing revenue grew to $333 million from $282 million in the prior year," Citron said
A spokesperson for Twitter responded by saying that the platform is "public by its nature" and that tweets are "viewable and searchable by anyone".
They added: "This is the power of Twitter. To be clear, our data licensing business does not sell DMs - any reports to the contrary are wrong.
"Our data licensing business helps capture the amazing uses of Twitter by building on that public data. Here's an example of one of the awesome uses from a few years ago."
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