Twitter's revenue surged 28% year over year to $1.29 billion, fueled by
strong user growth in international markets. The social media company's
monetizable daily active usage (mDAU) -- essentially, the number of people who
logged in and accessed Twitter's apps -- climbed 27% to 192 million.
Advertising dollars follow eyeballs, and Twitter's ad revenue rose 31%
to $1.15 billion. "Advertisers are
benefiting from new ad formats, stronger attribution, and improved
targeting," Twitter Chief Financial Officer Ned Segal said in a press
Twitter stock is becoming more profitable as it scales its revenue base.
Its operating income soared 65% to $252 million, as its operating margin
expanded to 20%, up from 15% in the year-ago quarter.
The Catalysts Behind The Trade…..Read the full
Twitter stock is in a strong position ahead of earnings, which it is set to
report Feb. 9 after the closing bell.
In the most recent quarter — reported on Oct. 29 — the company reported
better-than-expected Q3 results, but weak user growth. Twitter ended the
quarter with 187 million daily active users, well below estimates of 195
million. It added just 1 million new users, vs. 20 million in the previous quarter
and 6 million in the year-ago period.
Driven by a rebound in advertising demand, revenue climbed 14% to $936
million, above consensus of $777 million. Adjusted earnings of 19 cents per
share topped views of 14 cents.
Analysts polled by FactSet expect sales growth of 23% in 2021, and 4.3% for
KeyBanc analyst Justin Patterson wrote in a client note Thursday that his
view of Twitter now values the stock at $65, giving it a Buy rating.
In the note, Patterson says that Twitter has made significant improvements
to its main product, the Twitter app for the web and mobile devices, which will
help the company generate more money.
“We believe Twitter has made
meaningful strides to improve its platform for users and advertisers. User
adoption of Topics continues to grow rapidly, providing both a better user
experience and improved targeting for advertisers,” he wrote in the note.
The analyst believes a cyclical ad recovery, a ramp-up in direct response
products and new product experiences like Revue, with an estimated total
addressable market of $36 billion, will lend upside to the current consensus
estimates for the company.
Patterson calculates that the improvements for both the company’s ad
customers and its members have positioned the company to boost revenue more
than 20% a year through 2022.
Despite the potential fallout from banning former U.S. President Donald
Trump from the platform, Patterson thinks the action hasn’t yet caused users to
flee the platform. Rather, he estimates that the company will grow its daily
user base by about 10% year.
The Actual Recommended Trade.....
** OPTION TRADE: Buy TWTR
FEB 12 2021 55.000 CALLS at approximately $2.25.
(bought for 2.28)
The Profit Explained…..
“Weekly Options Members” entered a Twitter
stock trade on Monday,
February 01, 2021 for approximately $2.28.
After the earnings report the options
trade hit a high of $14.00 (Potential profit of 514%).
Excellent profit from Twitter stock within a short
period of time!
However, any members still holding the
trade there is still a chance that this profit could be exceeded.
Moving Forward for Twitter Stock…..
ahead, Twitter guided for first-quarter revenue of between $940 million and
$1.04 billion. The company also said it plans to increase its number of
employees by more than 20% in 2021, which will contribute to a 25% increase in
earnings call, CEO Jack Dorsey addressed the platform banning former U.S.
President Donald Trump, saying Twitter is “bigger
than any one account.”
Further Upside for Twitter Stock.....
KeyBanc analyst Justin Patterson said Twitter’s ad ramp is “just getting started.”
product catalysts in the near and medium term, we have more conviction in
>20% annual revenue growth,” Patterson wrote in a note. KeyBanc has
an Overweight rating and $80 target.
Morgan Stanley analyst Brian Nowak said Twitter’s new MAP 2.0 and other
products will be key to the Twitter growth story.
the types of micro-level improvements that are important to driving durable
outsized growth...and advertiser/agency incremental adoption of this product is
likely to be important to determining how fast revenue can really grow
throughout ‘21,” Nowak wrote.
Bank of America analyst Justin Post said the MAP rollout provides
significant potential upside for 2021 growth numbers. Bank of
America has a Buy rating and $78 target.
full impact of MAP launch and iOS 14 changes are still unknown, we continue to
see expansion of Twitter’s limited DR ad spend as a material growth driver for
the next three years, while Twitter should have a more limited ‘21 iOS revenue
impact vs peers,” Post wrote.
Raymond James analyst Aaron Kessler said Twitter demonstrated impressive
advertising strength in the fourth quarter.