Is tweeting back in vogue? The stock market thinks so. Twitter Inc (NYSE:TWTR) stock is soaring to right around 52-week highs after the company reported much better than expected third quarter earnings. TWTR stock is up nearly 20% to $20. Unfortunately, $20 is a level which TWTR stock has failed to consistently trade above since late 2015.

Yes, the growth story looks good right now. Revenue growth is approaching an inflection point and will likely turn positive again next year. Margins are soaring higher and the company is on the verge of finally becoming profitable on a GAAP basis. With such critical transition points in the near future, it is tempting to buy in.

But TWTR stock still trades at a hyper-rich valuation. Ad revenues are still in decline despite an exceptionally strong secular backdrop in digital advertising. User growth still remains a problem. Daily engagement growth is underwhelming. New growth initiatives in video will likely be short-circuited by the video efforts of far larger players.

In the bigger picture, record EBITDA margins and the prospects of marginal GAAP profitability doesn’t really matter all that much. Not when you have a stock that is trading at north of 50-times fiscal 2017 earnings for earnings that are expected to grow at under 20% per year over the next several years.

There is only one way of looking at TWTR stock: it is way overvalued.

All The Same Problems

Despite the stock’s massive move higher, Twitter is victim to all the same problems that have held the stock back for so long.

Ad revenues are still in decline. That is a major red flag considering the digital advertising industry is experiencing robust growth. Advertising dollars are flowing en masse from traditional mediums to digital mediums, and yet, Twitter’s ad revenues are still down.

By comparison, Facebook Inc (NASDAQ:FB) reported ad revenue growth of nearly 50% last quarter. Snap Inc (NYSE:SNAP) reported revenue growth of more than 150% last quarter. Alphabet Inc (NASDAQ:GOOG) reported ad revenue growth of nearly 20%.

Clearly, Twitter is still the ugly duckling in the digital advertising world.

Meanwhile, monthly user growth remains drab. The monthly user base continues to grow at a tepid 4-5% rate. Facebook’s monthly user base is growing at a 17% rate from a much, much bigger base.

And even though Twitter likes to tout its daily usage growth, that too is underwhelming. Daily usage was up 14% in the quarter versus 12% last quarter and 14% the quarter before that. Over at Facebook, daily usage is up 17% on a much bigger base. At Snap, daily usage is up 21% on presumably a comparable base.

So the user growth problems weren’t magically solved in the quarter.

Moreover, management continues to believe that video offers a huge growth opportunity for the platform, but these initiatives will likely be short-circuited by the efforts of far larger players. Everyone is going over-the-top. That includes Facebook, Snap, and even traditional broadcasting giants like Walt Disney Co (NYSE:DIS). With the over-the-top video space becoming so crowded, it is tough to see how Twitter succeeds here. The company lacks the connections, the resources, the content, the reach and the differentiation to become a big player in this space.

All in all, Twitter didn’t really address any of its core problems. The company has managed to cut back expenses a whole bunch and drive record profit margins, but this is the mountain-top for margins. Management said on the call that the expense base has come down to a point where any further margin expansion will be driven by revenue growth, not expense cutting.

Where will that revenue growth come from? The user base isn’t growing all that much. Daily engagement growth is underwhelming. New initiatives will likely be short-circuited by the efforts of bigger players.

Bottom Line on TWTR Stock

Twitter is the ugly duckling in the social media and digital advertising spaces.

Ugly ducklings don’t deserve premium valuations.

But TWTR stock now trades at over 50-times this year’s earnings estimate, versus a 32-times multiple for FB stock and a 31-times multiple for GOOG stock.

Overall, this is just another rally in TWTR stock that should be faded. The stock will very likely remain range bound into the foreseeable future.

As of this writing, Luke Lango was long FB and GOOG.