Twitter (NYSE 🙂 stocks are on fire. Shares are up more than 40% in the first two months of 2021, far outstripping rivals' gains. This unexpected rise has even pushed the share of this social media giant above the level of the IPO in 2013.
Twitter, which closed at $ 77.63 yesterday, has more than doubled in the past 12 months, adding 130% in value. During that time, shares of Facebook (NASDAQ 🙂 are up 35%.
So, what made Twitter stock so desirable again after spending several years in the wilderness?
The answer: The microblogging app's strong profit momentum and the company's ambitious growth plan, which are gaining momentum.
For the period ended December 31, the number of daily Twitter users increased from 187 million to 192 million in the third quarter. This included an impressive 1 million additional users in the US alone. Twitter produced about 20% growth in daily active users for five consecutive quarters and has predicted that this will happen again in the current period.
Behind these successes are Twitter's turnaround efforts, which began shortly after the 2016 US election. During that time, Twitter has drastically improved its product, aggressively moderated its content, and cleaned its platform of abuse and toxic content.
Trump Ban Does Not Affect Growth
With strong user growth, the company also informed investors last week that banning former US President Donald Trump in January will not have a negative impact . The permanent ban on Trump tweets, the platform's most followed personality, led to predictions of massive user losses among the 74 million Americans who voted for him.
That clearly did not happen. In early February, Twitter told investors that it added more daily users in January than the average number it gained in that month over the past four years.
KeyBanc analyst Justin Patterson, one of the most optimistic analysts on Twitter stocks, sees a "full recovery" in Twitter ads and continued success in driving audience and advertiser engagement. Patterson has an overweight rating on the stock, with a target price of $ 80.
Twitter shares got an extra boost last week as the company presented its three-year growth plan to analysts as part of its drive to accelerate new product launch amid criticism that CEO Jack Dorsey has been too slow with the launch and testing of new products.
The company's first "Analyst Day" since 2014, held on February 25, outlined a number of ambitious goals, including doubling sales and adding more than 120 million new users over the next three years to a total of 315 million by the end of 2023.
Twitter also plans to launch a newsletter subscription service and audio product called Spaces to challenge Clubhouse, a fast-growing $ 1 billion audio app in a recent round of funding. The newsletter initiative, called Super Follows, is aimed at influencers with a large audience and offers the opportunity to receive payments for their content.
Bottom Line
The rise in Twitter stock shows that the company is successfully transforming its platform into one that advertisers increasingly value. Investors are also excited about the company's new initiatives, which could drive further growth in revenue and user base.
