Why Shares of TWTR Stock Jumped Double-Digits

by Burke Speaker | December 10, 2013 10:04 am

The most recent advertising success from Twitter (TWTR[1]) have given TWTR stock a double-digit boost, as investors provided the biggest lift since its IPO.

twitter-stock-twtr-stock[2]While the San Francisco-based company has yet to make a profit — and isn’t expected to until 2016 — investors put their confidence in TWTR stock based on its confidence in its targeted advertisements.

The company is showing that it is pushing to reach its audience via ads in smart ways and investors are responding — TWTR stock is up some 23% in the past five days.

From Bloomberg:[3]

Twitter shares gained 9.3 percent to $49.14 at the close in New York for the biggest jump since Nov. 7, the stock’s first day of trading, when it climbed 73 percent and touched an intraday high of $50.09. With a market capitalization of $27.9 billion, the microblogging service is among the most expensive Internet companies.

The company has been adding features for advertisers to help them reach its more than 230 million users. Last week, Twitter expanded a tool that lets marketers target consumers who have already expressed interest in their products based on Web-browsing histories. Such new offerings are helping to justify the stock’s price, said Brian Nowak, an analyst at Susquehanna Financial Group.

“We’re seeing that there’s a lot they can do with targeting and retargeting for advertisers,” Nowak told the news organizaton. “Over time it will help them grow into their valuation.”

Twitter’s big hold is its news dominance in the social media realm. As InvestorPlace has previously noted, Twitter has already been establishing itself as more of a global news brand, with Tweets on breaking news developments leading the way for users to instantly get the latest updates.

Each month, some 200 million users turn to Twitter for these types of events.

Its in these Tweets and even the mundane ones that Twitter execs hope to infiltrate their targeted advertisements — both in clickable links and the new push into video.

While investors were initially even wary of how well yet another social media company would do after how Facebook started off, TWTR stock has proven resilient.

Twitter has risen 89% since its IPO, when shares were $26 apiece.

As Bloomberg notes: That makes it more expensive than competitors Facebook (FB[4]), with a price-to-sales ratio of about 12, and LinkedIn Corp. (LNKD[5]), which trades at about 13 times estimated revenue.

In the near future, Twitter could prove to be an unexpected heavyweight if its base continues to grow and its targeted ads prove a true long-term success.

More on TWTR stock here.[6]

  1. TWTR: http://studio-5.financialcontent.com/investplace/quote?Symbol=TWTR
  2. [Image]: https://investorplace.com/wp-content/uploads/2013/11/Twitter185.jpg
  3. From Bloomberg:: http://www.bloomberg.com/news/2013-12-09/twitter-rises-most-since-ipo-amid-advertising-product-optimism.html
  4. FB: http://studio-5.financialcontent.com/investplace/quote?Symbol=FB
  5. LNKD: http://studio-5.financialcontent.com/investplace/quote?Symbol=LNKD
  6. More on TWTR stock here.: https://investorplace.com/search/?q=twtr&category=all&sort=relevance

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