Twitter, Inc. (TWTR) is one of the most popular, yet distinctive, social media platforms, attracting millions of users from all over the world since its inception 14 years ago. Its popularity increased significantly since the onset of the pandemic with people spending more time on social media while staying at home. TWTR’s daily active users increased 24% year-over-year in the first quarter to 166 million.
TWTR’s CEO Jack Dorsey described the reasons behind this growing viewership as, “People are turning to Twitter to stay informed, to share solutions and to ask for help and support one another, and we see it in the numbers.”
Also, with the US presidential elections round the corner, TWTR is gearing up for a busy season ahead. Its growth momentum in the upcoming months combined with several other factors have helped the stock earn a “Buy” rating in our proprietary POWR Ratings system.
Trade Grade: A
TWTR is currently trading above its 50-day and 200-day moving averages of $41.2 and $34.2, respectively, indicating that the stock is in an uptrend. In fact, the stock’s 39% return over the past three months reflects a solid short-term bullishness.
For the second quarter ended June 2020, TWTR’s Monetizable Daily Active Usage (mDAU) grew 34% year-over-year to $186 million. This growth was mainly driven by a drastic increase in social media usage since the pandemic-led lockdown. TWTR generated $201 million cash from operations and $39 million free cash flow over this period.
The company has stayed ahead of its game through various acquisitions such as MarketingTech, Artificial Intelligence Apps, Social Platforms, etc. In mid-February, TWTR acquired Chroma Labs, a story template maker and in May 2020 it acquired Crossinstall, an interactive mobile advertising company. Both these acquisitions were strategic – the former was to enhance the viewer’s experience while the latter was acquired to tap into the expert advertising and user acquisition strategies.
TWTR recently entered into a partnership with Bud Light and NFL to give viewers a holistic digital experience during the upcoming football season. It also teamed up with WebMD to increase awareness on several healthcare related topics to help combat the pandemic.
One of the biggest milestones achieved by TWTR this year is completing its ad server rebuilds to support faster product development. This has increased the platform’s stability, as well as helped it scale the advertising segment.
Buy & Hold Grade: A
In terms of proximity to its 52-week high, which is a key factor that our Buy & Hold Grade takes into account, TWTR is well positioned. The stock is currently…
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