Twitter Inc (NYSE:TWTR) stock is soaring after the company reported what looks like the ultimate turnaround quarter. As of this writing, Twitter stock is still up more than 14%.

Advertising revenue growth, which had been flat or negative for the past 4 quarters, inflected into positive territory (+1%). Total revenue growth, which had been negative for the past 3 quarters, also inflected into positive territory (+2%). Company wide EBITDA margins just hit 42%, a record high. Most importantly, the company was profitable on a GAAP basis for the first time ever.

So you can see why bulls are screaming turnaround.

But when it comes to valuing Twitter stock above $30, the numbers just don’t add up. I can’t get to a $30-plus present valuation unless this company somehow becomes more profitable than Facebook Inc (NASDAQ:FB) and/or revenue growth comes back with a vengeance (20%-plus).

I don’t think either of those things will happen. Consequently, I think fading this rally is the best thing to do.

Numbers Point To Downside For Twitter Stock

A couple weeks ago, I said that the key to a Twitter stock breakout was data licensing. The company has a unique opportunity to monetize its wealth of consumer sentiment data, and turn those data points into high margin dollars.

The company is doing this (data licensing revenues were up 10% in the quarter). And the advertising business is bouncing back. So it looks like positive growth and long-term margin expansion are both here to stay for the next several years.

But this isn’t a hyper-growth story. Revenue growth was just 2% last quarter, while user growth was just 4%. Without robust user growth — Twitter’s monthly active user base has been stuck around 330 million for the entire year — it’s tough to see the company really ramping its revenue growth rate up to a 20% level. More realistically, revenue growth will look like 10% per year over the next 5 years.

Looking at margins, Twitter is coming off a record year in terms of margin expansion. But that margin expansion is expected to cool off next year as the company is investing in order to grow. I get that, so I’m not knocking the company for flat margins in 2018. But longer term, I don’t see this company being more profitable than Facebook given Twitter’s lack of scale, which naturally drives expense leverage. Overall, I think the best case scenario for Twitter is operating margins of 50% in 5 years — which is around current Facebook levels.

What Is  Twitter Stock Actually Worth?

So let’s take a 10% annualized revenue growth rate with 50% margins in 5 years. This puts revenues at just over $3.9 billion and operating profits at just under $2 billion in 5 years.

Take out $100 million in interest expense, slap a 21% tax rate, and divide by what should be a share count near 800 million, and you get to earnings per share in 5 years of roughly $1.85.

At that point time, Twitter will look a lot like how Facebook does today, just with less top-line growth. Consequently, at best, Twitter stock in 4-5 years should get the same valuation as Facebook stock does today.

Facebook stock currently trades at 20-times forward earnings. A 20 forward multiple on $1.85 implies a 4-year forward price target of $37 for Twitter stock. Discount that back by 10% per year, and you get to a present value of roughly $25.

Bottom Line on TWTR Stock

At most, I think Twitter stock is worth $25 today. And that assumes 10% revenue growth and Facebook-like profitability in 5 years, both which seem like a stretch.

Twitter stock is currently trading north of $30.

Considering Twitter’s current stock price is markedly higher than my best-case price target for this stock, I think Twitter stock is dramatically overvalued. I wouldn’t be surprised to see this stock fall back down quite rapidly over the next several months.

As of this writing, Luke Lango was long FB.