The Ratings Game
Analysts seemed generally relieved by the company’s user-growth commentary following its permanent ban of former President Donald Trump
Twitter Inc.’s stock took off in Wednesday after the social-media company’s fourth-quarter results and commentary about the outlook helped relieve concerns about how the service will fare in the new reality.
For the first quarter, the company expects 20% growth in its count of monetizable daily active users, a projection that “mostly mitigated” fears of a user exodus following the company’s decision to ban former President Donald Trump from the platform, wrote Bernstein analyst Mark Shmulik.
is bigger than just one man,” Shmulik continued, emphasizing the management team’s point that 80% of Twitter’s audience comes from outside the U.S. He has a market perform rating on the stock and raised his price target to $65 from $52.
Shares of Twitter were up 8.7% in morning trading, and were on track to close at a new seven-year high. The stock is headed for an eighth-straight gain, and on pace for its best eight-day stretch since the period that ended Feb. 16, 2018, according to Dow Jones Market Data. Read more about Twitter’s fourth-quarter results.
Twitter “has long faced criticism for not providing as granular guidance as some of its peers,” wrote Pivotal Research Group analyst Michael Levine, who “found the greater level of transparency extremely encouraging.” He commented that Twitter’s management team “led with a swagger and confidence we have not seen in some time.”
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Levine has a buy rating on Twitter’s stock and lifted his price target to $77.25 from $67.
MKM Partners analyst Rohit Kulkarni highlighted Twitter’s disclosure that its increase in average absolute monetizable daily active users during January was above its historical average for the last four years, which suggested to Kulkarni that the “Trump ban headwind is behind Twitter.”
Kulkarni reiterated a buy rating and upped his price target to $73 from $60 in a note titled: “This Birdie Is Ready to Perform & Fly Smoothly In A Post-Trump Era.”
Leaving aside the Trump impact, others were less sold on the company’s prospects. “It’s worth calling out even in the strongest quarter we can recall in the digital ad market, Twitter’s U.S. [average revenue per user] only increased 7% YoY,” wrote Evercore ISI analyst Kevin Rippey. “Compare this to FB
+27% on the same metric and SNAP
Rippey said that while a common argument for Twitter bulls is that the company has an attractive long-term opportunity ahead if it fixes its challenges with monetizing its user base, he saw “little evidence in the 4Q result or forward outlook that suggests underlying organic trends have inflected.”
He maintained an in-line rating on the shares while boosting his price target to $50 from $40.
In raising his price target on Twitter shares to $58 from $48, Cowen Equity Research analyst John Blackledge noted the company’s user growth
has “consistently been in the low double digits, and we expect DAUs to grow modestly thru 2026.” More importantly, he forecasts Twitter to grow slightly above worldwide digital advertising rates over the next five years.
UBS analyst Eric Sheridan, equally enthused about Twitter’s prospects, hiked his price target to $60 from $52 in a Thursday note titled, “Flying Into The Analyst Day.”
Twitter shares have gained 52% over the past three months as the S&P 500
has risen 9.6%.