Twitter (NYSE:TWTR) came out of the gates strong with its initial public offering (IPO) in late 2013. But by 2014, Twitter had stalled, hitting a high in the mid-$60s — double where Twitter stock trades today.
Through 2016 and 2017, TWTR has hovered in the mid- to upper teens. But midway through 2017, Twitter’s momentum started to build.
TWTR is not quite back to its 52-week highs of $47 per share, but it’s showing strong earnings growth and looking at a whole new set of opportunities.
Twitter’s Comeback Story
It certainly hasn’t hurt that the president of the United States uses his Twitter account as his direct line to the public, outside the filter of the media and many times, his own advisors.
Whether people love him or hate him, they follow him. And those tweets are watched around the world by government leaders, intelligence sources and policymakers. They’re followed by business leaders and regular people.
In essence, as Twitter was losing its relevance, it was revived by one of the most controversial figures of the early twenty-first century.
But it’s not that Donald Trump deserves all the credit. CEO and founder Jack Dorsey has much to do with that. And now that social media is maturing, there are new opportunities that are helping Twitter to grow market share and advertising with digital natives.
Twitter has always been a unique platform, since until recently you were limited to expressing your thoughts in 140 characters or less (that has since been doubled). While it rewarded brevity and thought, the platform’s minimalist architecture made it difficult to find new avenues of growth.
It has proven its value in many natural disasters and uprisings in closed societies. It has an immediacy that other social media tools don’t provide as powerfully.
That said, social media companies are about growing their user bases and expanding revenues — something Twitter had a tough time doing.
Users became jaded as Jack Dorsey & Co. kept throwing things against the wall to see if they stuck — like Vine — and then, maybe, they would stay.
The problem is, if you’re not sure the micro-video format is going to be around, there’s little reason to dedicate your social media efforts toward it.
But all that is changing for the better, and it’s a key reason the stock is up 32% year-to-date, even after the big tech selloff in October. In the past year, it’s up 62%!
Bottom Line on Twitter Stock
Some of its current success is attributed to the problems that Facebook (NASDAQ:FB) is having regarding privacy issues. As people pull back from the social media giant, they’re looking for alternatives, which certainly doesn’t hurt Twitter.
More importantly, advertisers are looking for alternatives to FB and Twitter fills that void. Specifically, it’s a $400 million opportunity for TWTR!
You can see it in Twitter’s third-quarter numbers (released Oct. 25) — earnings and revenue blew estimates away. The only concern was monthly active users fell about 4 million short of estimates (a 1% miss). But TWTR has been aggressively cutting junk accounts to make its existing base more valuable, so this isn’t a great concern.
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.
