Social media platform Twitter (NYSE:TWTR) started 2021 on a low note, with shares slipping before a February rally saw TWTR stock close at an all-time high. With the company’s first quarter 2021 earnings date not far off, Twitter shares have been flirting with that high again. Is now the time to make a move?
TWTR stock earns a “B” rating in Portfolio Grader. There are certainly riskier stocks out there, but Twitter’s biggest moves in the past three years took place in 2020 and the first few months of 2021. Has this social media stock run out of steam, or is there room for further growth? If so, the time to make a move may be just prior to the company’s Q1 earnings report at the end of April.
Twitter’s Fourth Quarter 2020 Led to an All-Time High for TWTR Stock
Twitter started off 2021 on a sour note. After announcing it was permanently banning President Donald Trump’s account, Twitter stock slipped. However, a turnaround was just around the corner.
Twitter shares closed at an all-time high of $77.63 on March 1. The reason for the performance was the company’s Q4 earnings results, reported on Feb. 9.
The company beat Wall Street estimates for earnings and revenue. Record-setting revenue for the quarter was $1.29 billion, up 28% year-over-year. Wall Street had been expecting $1.19 billion. Adjusted earnings per share of 38 cents easily beat the forecast of 31 cents.
Those impressive results triggered an immediate, one-day gain of 13% for TWTR stock. The momentum continued for several more weeks before Twitter got caught up in the tech stock selloff.
While Twitter’s Q4 results impressed investors, one metric the company reported did concern analysts. The platform’s monetizable daily active users (mDAUs) fell short of projections at 192 million (compared to the 193.5 million analysts were looking for). The number that Twitter reported was up 26% YoY, but there are concerns Twitter’s user growth is slowing.
That’s been a concern that has dogged the platform for years. Another is the continued scrutiny over Twitter’s potential for misuse for political gain. The company’s move to ban President Trump in January was just the latest chapter in this story.
Another worry is that the rollout of iOS 14 on iPhones — a release designed to increase privacy by limiting ad tracking capabilities of apps like Twitter — will hit advertising revenue.
The Bottom Line on TWTR Stock
At this point, most analysts are taking a wait and see approach on TWTR stock. The potential is there for Twitter to keep growing its business and profitability. However, between a major internal security breach, a pandemic’s impact on ad revenue, and having to ban a President from the platform, the past 12 months have showed that the path forward may not be a smooth one.
The Wall Street Journal is tracking investment analysts who cover Twitter. They have a consensus “Hold” rating on TWTR stock — a position that hasn’t changed in three months. Their average 12-month price target of $73.09 offers a modest, single-digit upside.
So where does that leave investors? If the company can maintain the momentum from its impressive Q4 results, the picture looks good. We will find out in a matter of weeks when the company reports Q1 2021 earnings. If you’ve been considering a TWTR stock purchase but are uncertain, you might want to hold off until then to be safe.
You do need to weigh that caution against the possibility that if Twitter delivers, the stock could take off again like it did in February as the market reacted to its Q4 earnings. In that case, now is an opportunity to move before TWTR stock rallies again.
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.
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