Twitter's stock fell the most since it debuted on the New York Stock Exchange after Macquarie Capital downgraded the social-networking company, saying the stock has gone "too far, too fast."
The shares of the microblogging service fell 13 percent to $63.75 at the close in New York. The stock had almost tripled through Thursday since a Nov. 6 initial public offering.
Ben Schachter, an analyst at Macquarie in New York, lowered his rating from neutral to underperform -- the equivalent of sell. The shares have jumped 40 percent since Macquarie initiated coverage Dec. 11, without any improvement in Twitter's fundamentals, Schachter said in a report.
"We continue to believe that Twitter as a company has a bright future and many opportunities ahead," he said. "However, as a stock, we believe nothing has changed over the last 15 days to justify the rise in valuation."
The recent rally has put shares of San Francisco-based Twitter well above Schachter's 12-month price target of $46.
The unprofitable company was valued at $41.6 billion as of yesterday's close, making it larger than Time Warner Cable, Viacom or Target. Investors expect Twitter to benefit from a surge of mobile-advertising sales. Still, the wide discrepancies in analyst revenue estimates have raised concerns, Schachter said. Twitter's IPO had a relatively small number of underwriters, leading to a situation where more than a dozen banks initiated coverage without getting detailed guidance from management, he said.
Twitter also needs time to build up its head count, according to Schachter. The company has half as many employees as Facebook, the world's biggest social-networking site.
"It takes time and people to execute against opportunities," he said.