Stock (Symbol) |
Twitter (TWTR) |
Stock Price |
$33 |
Sector |
| Retail & Travel |
Data is as of |
| February 13, 2018 |
Expected to Report |
| May 9 |
Company Description |
 Twitters products and services include Twitter, Periscope, Promoted Tweets, Promoted Accounts and Promoted Trends. Its Twitter is a platform for public self-expression and conversation in real time. Periscope broadcasts can also be viewed through Twitter and on desktop or mobile Web browser. Source: Thomson Financial |
Sharek’s Take |
 Twitter (TWTR) is a hot stock, believe it or not. After TWTR went public around $40 in November 2013, it quickly shot to $70 before the end of the year. Then went on a two-year ride down to $15, and pretty much stayed between $15 and $20 for most of 2016 & 2017. But late last year the stock broke out above $20 even as profit growth was negative. This year? The stock is hot, with everyone getting on the Twitter bandwagon. One of the reasons for the bullishness is Facebook decided to move away from being a news source, which is Twitter’s scene. And then last qtr the company was expected to have profits decline 13% but instead beat the street and reported 19% profit growth. The company had profits decline in each of the first three qtrs of 2017, so a return to profit growth caused the stock to shoot up from $27 to $35. Honestly, the breakout wasn’t unexpected as smart investors were bullish on the stock before TWTR reported earnings last qtr. It was all over my Twitter feed. Looking at the stock now, it looks extended on the chart, and has a P/E of 59. On the user front, Twitter grew its active user base by just 4% last qtr. Also, the app has a lot of fake accounts, which needs to be addressed. But pulling those accounts will pull from its user base, which is used to sell ads. Oh and ad revenue was up only 1% last qtr. So overall this stock looks expensive to me, but in this time and age the franchise names are typically the ones to own, and Twitter is a big franchise that practically owns the area in which it resides. If you think about the big stock market winners of our time they were the dominant players in their field. Now it seems TWTR has righted the ship, and is on the way up. |
One Year Chart |
 I should have bought this stock last qtr, as TWTR had beaten the street by a good margin the prior three qtrs. Thus the good qtr last qtr took no one by surprise. Last qtr TWTR earned $0.19 and beat the street by 5 cents. It made $0.16 in the year-ago period. After the company reported, 2018 estimates increased from $0.46 to $0.57, with qtrly estimates rising as well. Now analysts have profit Estimates of 0%, 50%, 30% and 11% for the next 4 qtrs. And I bet the company continues to beat the street. The Est. LTG of 22% a year is fine, but that P/E of 59 is high. |
Fair Value |
 My Fair Value is 45 times earnings, which makes the stock worth $26 in my eyes. I do feel this stock is a Buy but the recent spike makes it too high in my eyes. |
Bottom Line |
 Twitter has turned the corner, and is now trending higher. It’s also beaten the street handily the last 4 qtrs, and that’s a key characteristic of top stocks. But you have to admit, this ten-year chart looks sick. And with the recent spike from $27 to $35 I want the stock to settle down a little bit before buying in. TWTR is on the radar for the Growth Portfolio. I like that the company is the key franchise in the online news space. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
