Goldman Sachs Sees as Much as 20% Downside in These Big-Name Tech Plays

Twitter (TWTR)

Leading off our list is social media giant Twitter, which Goldman initiated with a sell rating last week.

Goldman analyst Eric Sheridan planted a price target of US$60 on the shares, almost exactly where they sit today.

Sheridan has a generally positive view of the entire U.S. internet sector, suggesting 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 convinced Twitter will be able to appeal to a wider audience base long term or capitalize on the niche monetization opportunities its current audience base presents.

Sheridan says 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% last week in response to Sheridan’s view.

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Airbnb (ABNB)

Next up is vacation rental leader Airbnb, which Sheridan also initiated with a sell rating last week. The analyst placed a price target of US$132 on the stock, representing about 20% worth of downside. Airbnb shares quickly fell 5% last week after Sheridan’s bearish call, but have largely recovered since.

Sheridan did say some good things about Airbnb, calling the company a market leader in the space with attractive growth and margin-expansion opportunities.

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.

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. Going with a robo-advisor can also be a stress-free way to start investing.

Those looking to take control of their investments should certainly explore online trading platforms. The best sites offer resources and tools to help investors make informed decisions as they build and manage their investment portfolios.

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