Twitter (NYSE:TWTR) hasn’t been the big growth story everyone was counting on when it went public. As a matter of fact it’s well below its IPO price of $26 from late 2013 and is 30 points off its historic highs near $70.
And after years of struggling and sinking into a low in the mid-teens as recently as last year, Twitter stock is making a comeback.
TWTR is up 67% in the past 12 months and 26% year to date. And that’s after a 30% pullback in the past three months. The point is, Twitter stock is looking better than it has for a long time, but that doesn’t mean it has lost its volatility. The stock remains a wild bronco ride, but at least at this point it looks like volatility will have long-term benefits.
Some of its recent woes have been Washington, D.C.-type issues. Social media companies have been called in front of Congress to testify about their use of individuals’ data and the effectiveness of their privacy policies.
This is a big deal for social media firms since their main products are free and they have to find ways to monetize their user bases.
One way to do that is to compile user data and then slice and dice it and sell it to retailers or marketers looking for leads.
After it was revealed that Facebook (NASDAQ:FB) was involved in a high-level data mining operation of its users that was weaponized for the last presidential election, Congress started to worry that these tech firms weren’t really operating as innocently as they had seemed.
The concern on Wall Street was, if Congress got involved in regulating how social media firms collected and used their users’ data it could significantly affect their bottom lines.
And last week they showed up in Washington again.
Twitter Stock Faces Problems
For its part, TWTR is getting more press for its recent dropped and suspended accounts rather than issues with invading customers’ privacy.
Beyond the politics, Twitter stock is finally finding its footing. Its biggest challenges since inception were how to grow its base and how to monetize that base — the latter being a problem Facebook also struggled with for years.
TWTR continues to have trouble with growing its base. The stock was hit in late July when it announced Q2 earnings. While earnings were on target and revenue was above expectations, the coveted monthly active users (MAU) count was down by 3 million. That sent Twitter stock down hard and fast.
Since then, the stock has stabilized at its current level. From here it looks set to make a move higher, with lowered expectations being priced in and lots of new content and advertising deals showing up in Q4.
Its customer growth may still be a work in progress but its finding more ways to monetize the base it does have, which will help keep TWTR stock growing.
Louis Navellier is a renowned growth investor. He is the editor of four investing newsletters: Growth Investor, Breakthrough Stocks, Accelerated Profits and Platinum Growth. His most popular service, Growth Investor, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.