Note on Twitter
Once again, analysts are rushing to change their opinion and rating on Twitter, following its latest quarterly results. Most are slashing targets by 20% or more, with the consensus now being around $44. The stock is under attack and is currently trading below $40. This is good news for investors that have been patiently waiting on the sidelines.
Twitter’s results missed expectations but were they really that bad? While seeing a spike in monthly active users from 288 million to 302 million in the first quarter, Twitter reported sales of $436 million, missing analyst estimates of $457 million. Profit was 7 cents a share, while analysts estimated 5 cents. The company has also added new tools for advertisers, including promoted tweets and targeted advertising. While Twitter gets nearly all of its revenue from ad sales, apparently the company is having trouble getting advertisers who want their app downloaded, or click on their website, to sign up.
We agree that Twitter’s performance hasn’t been stellar to date. We maintain though that the medium has legs and, in time, it will manage to convert active users to cash. It will never be Facebook but it has a loyal and growing following that includes the right type of user. And this is key for future success.
Clearly the stock got ahead of itself. We believe that recent estimates are much more inline with reality than in the recent past. When the stock trades in the mid to low thirties, we believe it’s a worthwhile investment for the longer-term investor because we believe that at that entry point, an investor can expect a 20-30% upside within a year.
All information contained herein and any opinions expressed in it are intended solely for the use of customers of Elgin AMC (“Elgin”). This document is not, and should not be construed as an offer or solicitation to buy or sell any product, security or any other financial instrument. Any opinions expressed in this document are subject to change in that notice. This information is a marketing communication for the purpose of the European Markets in Financial Instruments Directive (MiFID) and CySEC’s Rules. It has not been prepared in accordance with the legal requirements designed to promote the independence or objectivity of investment research. This document is not based upon detailed analysis by Elgin of any, market, issuer or security named herein and does not constitute a formal research recommendation, either expressly or otherwise. It is not investment advice and does not take into account the investment objectives and policies, financial position or portfolio composition of any recipient. This document should not to be relied upon as authoritative or taken in substitution for the exercise of your own commercial judgment. This document has been prepared on the basis of economic data, trading patterns, actual market news and events, and is only valid on the date of publication. Elgin does not make any guarantee, representation or warranty, (either expressly or impliedly), as to the factual accuracy, completeness, or sufficiency of information contained herein. This document has been prepared by the author based upon informational sources believed to be reliable and prepared in good faith. Elgin does not make any representation or warranty, express or implied, as to the accuracy, completeness or correctness of this information. Elgin does not accept any liability for any loss or damage, howsoever caused, arising from any errors, omissions or reliance on any information or views contained in this document. The value of any securities mentioned in this document may move up or down, and the value of securities denominated in other currencies will also be subject to fluctuations in the relevant exchange rates. Securities issued in emerging markets are typically subject to greater volatility and risk of loss. Elgin’s officers, directors and employees may own or have positions in any investment(s) mentioned herein or related thereto and may, from time to time, add to or dispose of any such investment(s). This information is the intellectual property of Elgin. Redistribution or dissemination of this document is prohibited.
Elgin AMC is a trading name of Numisma Capital Ltd. Numisma Capital Ltd is regulated by the Cyprus Securities and Exchange Commission (CIF licence no. 122/10) Additional information from Elgin AMC is available upon request at firstname.lastname@example.org