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Twitter (TWTR): How Will The Stock Price Move?

Carla Olson | 6:53 pm ET, 20 Mar 2018

Facebook's (NASDAQ: FB) privacy issues have led to Twitter's (NYSE: TWTR) slump of over 10% today. This is because Twitter, as a social media company, derives revenue from ads, just like Facebook.

Its investors are obviously bothered by issues related to data security, corporate responsibility, as well as regulatory pressure. 

Investors perceive a change in the status quo of the social media companies.  Radical changes in the business models of Twitter, as well as Facebook, will become a necessity once users start deserting those social media empires (perhaps as a result of feeling frustrated about data breaches, such as the one that came from Cambridge Analytica).

The drop in Twitter's stock price is also attributed to the request made by the Israeli government for the removal of contents that spurred violence against the state

The Israeli government is even considering a legal action against Twitter, because of it failed to respond to the government's request. 

According to Finstead, Twitter has a negative price upside -21.73% (visit Finstead and type "TWTR upside").  Per Finstead research, the average price target is around $27.  

What are the prospects of the stock price rising? 

Twitter’s valuation ratio is relatively high compared to its peers (e.g., Zillow or JD).

If you’re a trader, there will be a point at which the stock will bounce back.  If you’re an investor, use your caution. 

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 Finstead Bites, please send us an email at hi@finstead.com.


Facebook (FB): Should You Buy The Stock Now?

Carla Olson | 7:31 am ET, 20 Mar 2018

The data incongruity issue has created a pressure on Facebook’s stock performance, which is down 6.79% in yesterday’s trading.  

Facebook is under huge pressure for letting the data company Cambridge Analytica acquire 50 million user profiles in the U.S., which the firm might have used to help Donald Trump in his election campaign.

The sell-off was instigated by a stipulation that Facebook allowed Cambridge Analytica to violate its terms of service since the firm used the data acquired by user submissions for commercial purposes.

From our perspective, the market might have over-reacted, since this problem was detected early and it was well taken care of by Facebook’s management.  

Facebook knew about the violation and blocked the controversial Cambridge Analytics application in 2015. The internet giant also ensured that all data acquired illegally was permanently destroyed.  

It is questionable whether all of the data was actually erased.

So we think this may be a buying opportunity for long-term Facebook investors.Based on Finstead research, Facebook’s stock price upside is 30%.

It is clear that the Facebook leadership team is trying to do the right thing to ensure consumer confidence.  

How high can the stock price go? According to Finstead, the average price target is almost $223.


Even though Facebook’s valuation is fairly high compared to its peers (its P/E ratio lags only that of GOOGL, SINA and TWTR), we see a potential for stock price appreciation because of the company’s high revenue growth (visit Finstead and type “FB growth” to get a sense of how high it is).  

Do you think Facebook will bounce back?

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 Finstead Bites, please send us an email at hi@finstead.com.


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

Carla Olson | 6:54 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 Finstead Bites, please send us an email at hi@finstead.com.


Twitter, Inc. (TWTR) Buy or Sell Stock Guide

Updated at: 1:31 pm ET, 25 Dec 2018

The analysis below may be helpful to you if you have any of the following questions about TWTR stock:

  • Is TWTR a buy or a sell?
  • Should I sell or hold TWTR stock today?
  • Is TWTR a good buy / a good investment?
  • What are TWTR analyst opinions, recommendations, ratings?

Here are TWTR stock buy reasons/signals:

1. Twitter’s unique open platform is attractive to due to its openness, real-time content, conversational format and distribution ability. The platform’s greatest strength is its simplicity. The company recently increased character limits for tweets to 280 from 140, to let users express more in a tweet.

2. Under its re-elected CEO, Jack Dorsey, the company is focusing on boosting user growth rate and engagement levels. Twitter remains focused on “live” and betting big on Periscope. It is now exploring beyond just news and the series of live streaming deals are a step in that direction.

3. Acquisitions have played a key role in Twitter’s growth trajectory. To-date, the company has acquired over 50 companies that not only expanded its technology but also improved its software developer talent base.

4. TWTR stock price ($26.45) is at the 52-week low. Perhaps now is a good time to buy?

5. TWTR quarterly revenue growth was 28.60%, higher than the industry and sector average revenue growth (9.60% and 5.17%, respectively).

6. TWTR profitability is improving. The YoY profit margin change was 13.64pp.

7. TWTR PEG ratio (P/E adjusted for growth) is 1.05, and it’s low compared to its industry peers’ PEG ratios.

8. TWTR average analyst price target ($34.11) is above its current price ($26.45).

Here are TWTR stock sell reasons/signals:

1. Brand marketing is one of the primary contributors to the company’s revenues. We have always maintained that Twitter’s ability to attract advertising revenues amid significant competition from the likes of Facebook and Alphabet will be a key factor determining its growth, considering the fact that investment in product development needs to continue. With troubles emanating from this area, we are more than ever cautious about what lies ahead for this micro blogging site.

2. As Twitter’s revenue growth is highly dependent on the size of its user base and user engagement levels, increasing competition from the likes of Facebook, Snapchat, Google Plus, Weibo, Pinterest, LINE and Kakao pose a threat. In fact, Facebook has witnessed an increase in its user base driven by strong growth across mobile and international users. Additionally, the company has been focused on revamping its other platforms like Messenger, Instagram and WhatsApp which can prove to be a headwind for Twitter.

3. We believe that sluggish user base/revenue growth rate coupled with its continuing investments on product development, costs related to international expansion and higher sales & marketing expenses will continue to negatively impact Twitter’s profitability in the near term.

4. TWTR forward P/E ratio is 40.30, and it’s high compared to its industry peers’ P/E ratios.

5. TWTR Price/Sales ratio is 9.50, and it’s high compared to its industry peers’ P/S ratios.

6. TWTR short share of float is 6.34%. The stock is much more frequently shorted than the average industry, sector or S&P 500 stock.

What are your thoughts on TWTR?

If you liked this analysis, check out Buy or Sell 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 Finstead Bites, please send us an email at hi@finstead.com.


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