Twitter At 5-Year High Ahead Of EarningsWall Street still hasn’t boarded the bull train, despite monetization initiatives and rapid share gains.
Twitter Inc. (TWTR) reports Q3 2020 earnings after Thursday’s U.S. closing bell, with analysts looking for a profit of $0.05 per-share on $773.16 million in revenue. If met, earnings-per share (EPS) will mark just one-third of the profit posted in the same quarter in 2019. The stock sold off at the end of July after missing Q2 top and bottom line estimates but recovered in August and is trading at a 5-year high.
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Twitter Monetization Initiatives
The social media giant is now caught in the crosshairs of the Republican Senate, accused of anti-conservative bias and message filtering. Even so, its booked exceptionally strong user statistics in the last two years, with 21% growth in 2019 and 34% growth in 2Q 2020. It’s currently engaged in new monetization initiatives, including digital marketing products and a subscription portal that has the power to reduce or eliminate noise from bots, trolls, and off-topic entries.
Stifel analyst John Egbert raised their target to $39 and issued an upbeat but cautious evaluation ahead of the report, noting “we expect Daily Average User (DAU) additions (+14mm q/q) to remain strong in 3Q as Twitter likely benefited from elevated conversation around social issues, the global pandemic, and ongoing elections. However, we believe Twitter needs to invest heavily in the security of its platform, following several breaches/privacy lapses, and develop more robust tools and technology for advertisers.”
Wall Street And Technical Outlook
Wall Street hasn’t jumped on the bull train just yet, still skeptical about the long-term outlook. Consensus yields a mixed ‘Hold’ rating based upon 3 ‘Buy’, 16 ‘Hold’, and 0 ‘Sell’ recommendations. Price targets currently range from a low of $39 to a Street-high $60 while the stock is now trading more than $5 above the median $46 target. The company may need to beat modest expectations and/or raise guidance to generate more positive coverage.
Twitter just completed a breakout above resistance at the opening print of the 2013 IPO in the mid-40s and is trading in the low 50s for the first time since April 2015. Accumulation readings have risen to all-time highs, confirming the breakout while raising odds the uptrend will eventually reach long-term resistance on the 70s. However, immediate upside may be limited, with initiatives just now underway and an election that could further politicize the social media sector.
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