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.

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