The share of the social media platform Twitter (NYSE: TWTR) was the focus of much controversy around the control of the US Congress along with colleagues like Facebook (NYSE: FB) and Google (NASDAQ: toget) regarding censorship, data protection and fend off liability concerns.
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April 6, 2021 4 min read
This story originally appeared on MarketBeat
The share of the social media platform Twitter (NYSE: TWTR) was the focus of much controversy around the control of the US Congress along with colleagues like Facebook (NYSE: FB) and Google (NASDAQ: toget) regarding censorship, data protection and fend off liability concerns. While the threat of state legislation looms, the company has advanced in its monetization and stickiness. Like most social media stocks, Twitter was viewed as a pandemic winner, with fears it would ease off due to COVID vaccinations as the money from the growth poured into value stocks when trading reopened. The market may underestimate the stickiness of social platforms, especially if mobility makes them even stickier. Prudent investors looking to get involved in a top-notch social media game can monitor the opportunistic pullback levels of Twitter stocks.
Earnings release for the fourth quarter of the 2020 financial year
On February 9, 2021, Twitter released its fourth quarter 2020 results for the quarter ending December 2020. The company reported adjusted earnings per share (EPS) of $ 0.38, excluding one-time items, versus consensus analyst estimates for a profit of $ 0.31, beating estimates by $ 0.07. Revenue rose 28.1% year over year to $ 1.29 billion, beating analysts’ estimates of $ 1.19 billion. Ad revenue grew 31% year over year to $ 1.15 billion. Data licensing and other revenue increased 9% year over year to $ 134 million. Monetizable Daily Active Users (mDAU) increased to 192 million compared to 152 million year over year.
Twitter provided a flat forecast for the first quarter of 2021 for revenue between $ 940 billion and $ 1.04 billion versus estimates of $ 964.61 for consensus analysts with operating income between (-$ 50 million) loss and breakeven. For the full year 2021, the company expects investments between 900 and 950 million US dollars. The company plans to increase its workforce by more than 20%, which will lead to an increase in spending of at least 25%. This also includes the construction of a new data center in 2021.
Virtual Analyst Day
On February 25, 2021, Twitter provided a long-term roadmap on its virtual investor day. They pledged to double the speed of development by 2023. The company plans to increase mDAU to 315 million users in the fourth quarter of 2023, a 20% year-over-year growth. Twitter expects total annual revenue to “at least” double from $ 3.7 billion in 2020 to $ 7.5 billion in 2023, compared to consensus estimates of $ 6.45 billion. The company anticipates that long-term GAAP operating margins will hit mid-teen and will adjust EBITDA margin in the 40% to 45% range.
Speculation with subscription models
The focus on monetization allows analysts to be optimistic about Twitter’s strategic direction. Speculation about a premium subscription model would be the ultimate revenue driver, but the loss of engagement must always be mitigated. Twitter investigates subscription offers under pressure from activists. Some of the speculation ranges from Tweetdeck fees to more advanced features like undo, tips, and profile optimization. Other potential subscription functions include premium versions of themes, fleets and rooms, as well as ad-free content. On March 29, 2021, Truist upgraded Twitter’s shares to a buy-from-hold with a target price of $ 74, citing double-digit mDAU growth and increased traction from advertisers, bringing revenue projections from 20% to 25% by 2023 CAGR have been raised. Low Balled Guidance plays it safe and sets the bar low.
TWTR Opportunistic Pullback Levels
Using the rifle maps in the weekly and daily timeframes provides an accurate pitch view of the landscape for TWTR stocks. The weekly uptrend in gun cards peaked at $ 80.75 Fibonacci (Fib) level. Stocks fell quickly as the Nasdaq sell-off crossed the weekly support for the 5-period moving average (MA) at $ 65.27 in an attempt to create a channel heading towards the 15-period. MA tightened at $ 60.52. The weekly has a make-or-break setup that can turn into either a downtrend or a mini-inverse pup. The daily downtrend in the gun cards is trying to stop as the 5 period MA rises at $ 62.93 in support from the stochastic mini-puppy. The Daily Market Structure Low (MSL) triggers above $ 64.96 and then contrasts with the weekly 5-period MA at $ 65.27. The daily make or break also threatens a Market Structure High Sell Trigger (MSH) on a $ 61.52 collapse. Prudent investors can monitor opportunistic withdrawals at the $ 62.22 Fib, $ 59.68 Fib, $ 57.44 Fib, $ 52.47 Fib, $ 50.54 Sticky 5s, and the $ 48.57 Fib. Make sure to check out PINS and FB along with social media colleagues. The upward moves range from $ 71.80 all the way to $ 92.86.