What a difference a couple of weeks make. When I last wrote about Twitter (NYSE:TWTR) in late January, I bullishly noted that Twitter stock was already rebounding from a weak start in 2021.
Now look.
Twitter is up an astounding 38% since that article went online. Twitter stock is hitting record highs and is just coming off a strong fourth-quarter earnings report.
And most notably, Twitter is putting former President Donald Trump and his banned @realDonaldTrump account firmly in the rearview mirror. In fact, Twitter is showing that it will be just fine, thank you very much, without the former president’s daily appetite for Twitter takedowns.
Twitter CEO Jack Dorsey directly addressed the January decision to permanently suspend Trump’s account, even though he avoided saying Trump’s name.
With everything that’s been happening in the world, in the U.S. and on our service around the U.S. elections, we’ve been getting a number of questions from you all about our audience. We are a platform that is obviously much larger than any one topic or any one account. Eighty percent of our audience is outside the United States and we have more than 50 accounts with over 25 million followers. Conversations on Twitter every day are based on what’s happening in the world. And we have proven in the past few years that if we do the work to serve the public conversation, our daily audience grows. To anticipate the question, the increase in average absolute mDAU through the end of January was above the historical average in the last four years, and we expect to see mDAU growth of approximately 20% year-over-year in Q1.
It’s a startling turnaround for Twitter stock – remember, TWTR fell 6% the day after the company announced Trump’s suspension. I had a lot of confidence that Twitter would bounce back, but the speed of the turnaround is impressive.
Twitter Stock at a Glance
Fourth-quarter earnings for Twitter were solid, although the company disappointed slightly on its monetizable daily active users. Revenue came in a $1.29 billion, which beat analysts’ expectations of $1.19 billion.
Earnings were also a positive surprise, recording 38 cents per share versus the 31 cents in EPS that analysts had been looking for.
The company says mDAUs (monthly active Twitter users) were 192 million versus expectations of 193.5 million. You can attribute that directly to the presidential election and the fallout from Trump’s false claims that the results were contested.
But the Street isn’t worried, particularly since Dorsey is projecting 20% mDAU year-over-year growth in the first quarter.
Advertising revenue grew 31% on a year-over-year basis in Q4, reaching $1.5 billion. Total ad engagement also grew by 35% in the quarter.
Looking ahead, Twitter says it’s expecting revenue between $940 million and $1.04 billion in the first quarter. Revenue should grow faster than expenses, the company said, but Twitter is also increasing its employee county by more than 20% in 2021.
Dorsey told analysts that the company’s recent effort to raise user engagement through Twitter Fleets – temporary tweets that expire after a short period of time – look good. But it’s too early to measure how much Fleets will affect the stock in the long term.
The Bottom Line
Remember, Twitter was the worst-performing stock in the S&P 500 in January, falling temporarily to its 2013 IPO price. If you took a new position or added into an existing position on the dip, congratulations.
Now Twitter stock is firmly in the first quarter of 2021 and has turned the page on the @realDonaldTrump era.
It would be foolhardy to think that Twitter will continue to post 40% gains every month or so. But as I said in January, Twitter will maintain its relevance for the long term.
Twitter stock has a “B” grade and a buy recommendation in my Portfolio Grader right now.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation.
