Twitter's Hate Purge: Why Is The Stock Moving Up?

5:54 pm ET, 18 Dec 2017

Twitter

Today we saw the impact of Twitter's (NYSE: TWTR) new rules for hate groups/speech on its stock price.  The stock rallied more than 11% by market close.  

Why did the stock move up?  Our hypothesis is that removing profiles that include hateful imagery and names is likely to appeal to advertisers.  

More than 2/3 of Twitter's revenue is driven by US and international advertising (roughly 50-50 mix).  

Below are key drivers of Twitter's value that present opportunities for Twitter's stock upside:

  • U.S. Ad Revenue Per 1,000 Timeline Views: While we had originally thought this metric would decline at least 10% in 2017 from $21 in 2016, there could be an upside now, given the new 'speech rules' Twitter just announced.  We think the Company will now be more likely to attract advertising spend from US advertisers. 
  • International Ad Revenue Per 1,000 Timeline Views: This metric was $3.45 in 2016. The hate speech purge will impact international revenue to a lesser extent.  Our initial projection is that this number will grow at least 15% year over year, as the Company ramps up its presence and sales efforts outside the US.  

Reputable Twitter investors have called on the Company to clean up its platform.  At one point, Chris Sacca said the proliferation of bots on the Twitter platform was "embarrassing", and so his firm sold the TWTR stock.

Over the last year, TWTR returned +32.53%. This return is higher than Technology sector (27.74%) and S&P 500 (19.14%) returns, but lower than Internet Information Providers industry (42.27%) return.

Based on Finstead Research, TWTR average analyst price target is $18.33 (visit Finbot and type "TWTR price target").

Disclaimer: The news article above expresses the author’s opinion about the topic of the article. We strongly advise you not to base your investment decisions just on this article alone. If you’d like to become a writer for Finny Bites, please send us an email at hi@askfinny.com.

Twitter, Inc. (TWTR) Stock Guide

Updated at: 7:04 pm ET, 12 Jul 2020

Before we start: if you're looking for TWTR stock price, you can quickly find it out by visiting Finny and typing "TWTR quote". If you're looking for a quick scoop on TWTR stock (chart, price target, market cap, news and buy or sell analysis), go to Finny and look for "TWTR". You'll get all this info in one place. Or you can just type "TWTR news" to get the latest stock news.

Looking to buy or sell Twitter, Inc. (TWTR)? Interested in getting the full scoop on TWTR, including earnings and dividends, stock forecast, buy or sell analysis and key stats? If so, you came to the right place.

In this TWTR stock guide, we'll address key questions about TWTR, above and beyond what you can find on Yahoo Finance, Zacks, MarketWatch or Morningstar.

Here is what you'll be able to find in this guide:

Earnings and Dividends: earnings, earnings date, dividend rate and dividend yield;
Analyst Predictions: stock forecast and analyst ratings;
Analysis: Finny Score and buy or sell analysis;
Key Stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio, industry, sector, and number of employees.

And here is the list of questions we'll answer:
1. What are TWTR earnings?
2. When is TWTR earnings date?
3. What is TWTR stock forecast (i.e., prediction)?
4. TWTR buy or sell? What is TWTR Finny Score?
5. What are the reasons to buy TWTR? Why should I buy TWTR stock?
6. What are the reasons to sell TWTR? Why should I sell TWTR stock?
7. What are TWTR key stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

So let's start. Scroll down to the question that interests you the most.

Earnings and Dividends

1. What are TWTR earnings?

TWTR trailing 12-month earnings per share (EPS) is $1.61.

2. When is TWTR earnings date?

TWTR earnings date is July 23, 2020.

Analyst Predictions

3. What is TWTR stock forecast (i.e., prediction)?

Based on TWTR analyst price targets, TWTR stock forecast is $29.61 (for a year from now). That means the average analyst price target for TWTR stock is $29.61. The prediction is based on 36 analyst estimates.

The low price target for TWTR is $17.00, while the high price target is $46.00.

TWTR analyst rating is Hold.

Analysis

4. TWTR buy or sell? What is TWTR Finny Score?

#{finnyScore:67}Our quantitative analysis shows 4 reasons to buy and 2 reasons to sell TWTR, resulting in Finny Score of 67.

5. What are the reasons to buy TWTR? Why should I buy TWTR stock?

Here are the reasons to buy TWTR stock:

  • Twitter’s platform is attractive because of its openness, real-time content, conversational format and distribution ability. The platform’s greatest strength is its simplicity. The company increased character limits for tweets to 280 from 140 to let users express more in a tweet.
  • Under Jack Dorsey, the company is focusing on boosting user engagement levels and enhancing the product. The video content opportunity for Twitter could help the company grow at a double-digit rate again. Also, Twitter's revenue per user is high relative to other social networks and apps.
  • Twitter’s growth can partly be attributed to its successful acquisitions. To-date, the company has acquired over 50 companies that not only expanded its technology but also improved its software developer talent base.
  • Twitter prohibited all forms of political advertising on its platform--a move that some view will help the company in the long run (as opposed to maximizing short-term profit).
  • The company made a deal with the NFL to live-stream Thursday night games, so users can use Twitter to not only talk about games, but also watch them. This opportunity may prove to be significant--as other premium content providers could use Twitter in similar ways.
  • TWTR quarterly revenue growth was 2.60%, higher than the industry and sector average revenue growth (1.75% and 1.51%, respectively). See TWTR revenue growth chart.
  • TWTR profitability is improving. The YoY profit margin change was 13.64 percentage points. See TWTR profitability chart.
  • TWTR Price/Book ratio is 2.54, which is low compared to its industry peers’ P/B ratios. See TWTR forward Price/Book ratio chart.
  • TWTR cash to debt ratio is 1.85, higher than the average industry (0.17) and sector (0.17) cash to debt ratio. See TWTR cash to debt chart.

6. What are the reasons to sell TWTR? Why should I sell TWTR stock?

Let's look at the reasons to sell TWTR stock (i.e., the bear case):

  • The company relies on advertising for its revenue. Any downturn in the overall online ad space will have a significant impact on Twitter.
  • Increasing competition from Facebook, Snapchat, Weibo, and Pinterest pose a threat to Twitter. Facebook in particular is the competitor that Twitter fears the most, since it's constantly innovating. Also, Snapchat and Weibo are successful at attracting younger users and pose significant competition to Twitter, despite their relatively small size.
  • Twitter’s user growth is decelerating, so advertisers may allocate less of their budget toward ad placements on Twitter. Also, the company's continuing investments in product development, international expansion and sales & marketing will continue to negatively impact Twitter’s profitability in the near term.
  • TWTR average analyst price target ($29.61) is below its current price ($35.40). See TWTR price target chart.
  • TWTR short share of float is 4.75%. The stock is much more frequently shorted than the average industry, sector or S&P 500 stock. See TWTR short share of float chart.

Key Stats

7. What are TWTR key stats : revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

Let's look at the key statistics for TWTR:

Metrics TWTR
Price $37.45
Average Price Target / Upside $29.61 / -20.93%
Average Analyst Rating Hold
Forward Dividend Yield 0.00%
Industry Internet Content & Information
Sector Technology
Number of Employees 3,920
Market Cap $29.38B
Forward P/E Ratio 50.88
Price/Book Ratio 8.84
Revenue (TTM) $3.32B
YoY Quarterly Revenue Growth -18.80%
Profit Margin -37.06%

If you liked this analysis, check out Stock Guides for other stocks.

Disclaimer: The news article above expresses the author’s opinion about the topic of the article. We strongly advise you not to base your investment decisions just on this article alone. If you’d like to become a writer for Finny Bites, please send us an email at hi@askfinny.com.

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