Looks Like the Twitter Inc Growth Train Is “Back on Track;” Daniel Ives Sheds Light

GBH Insights' Daniel Ives views Twitter's 4Q print as a long-awaited, much needed, key "step in the right direction."


Twitter Inc (NYSE:TWTR) has drawn a bullish parade on the Street today, with shares popping 17% since this morning’s impressive fourth quarter showcase for 2017. Considering a year that has seen this social media giant fight hard to wage a comeback, investors must be thrilled to see the company’s first quarter of GAAP profitability.

GBH Insights analyst Daniel Ives notes that the “star of the show” for CEO Jack Dorsey’s social media giant points to more robust than anticipated advertising growth, which scored an 8% outclass against Street-wide expectations. Revenue beat out the Street by a whopping $45.1 million dollars.

Though the quarter provided patient investors a breath of new life for the struggling giant, Twitter still has more ground to gain back after “years of pain” in this turnaround narrative.

As such, though encouraged, the analyst reiterates a Neutral rating on TWTR stock with a $25 price target, which implies a close to 21% downside from current levels. (To watch Ives’ track record, click here)

For the fourth quarter, Twitter posted $731.6 million in total revenues, shattering the Street’s expectations for $686.5 million. Likewise, Twitter posted a bottom-line EPS beat, serving up a strong $0.19 against the Street’s $0.14 and stellar EBITDA of $308.0 million, far outclassing the Street’s $241.0 million forecast.

“Our GBH Tech Tracker results have been incrementally positive on Twitter as feedback from advertisers and user engagement appear to be trending positive into 2018 and this quarter was a major step in the right direction that shows the monetization and ad growth machine at Twitter is finally heading in the right direction after years of a ‘one step forward two steps back’ strategy,” asserts Ives.

However, the “clear blemish” of the print points to monthly active users (MAUs), where Twitter’s 330 million were shy of the Street’s $332.5 million and fell flat on sequential growth. However, on a brighter note, daily active users (DAUs) rose 12% year-over-year, outperforming expectations and “helping drive engagement and ad growth.” Moreover, the analyst notes, “initial 1Q Ebitda guidance is modestly above expectations and will be digested well by the bulls.”

Overall, this was a “4Q earnings blow out report” from Ives’ perspective, and it looks like this recovering social media giant’s “growth train is back on track” at last. Between a Facebook Newsfeed revamp offering a short-term advantage to Twitter along with a surging number of advertisers and publishers willing to take a bigger bet on the company’s ad platform, Ives sees “clear positive” ahead- from the sidelines.

TipRanks shows analyst sentiment that seems to align with Ives’ stance on the social media platform. Out of 21 analysts polled in the last 3 months, 6 are bullish on Twitter stock, 11 remain sidelined, while 4 are bearish on the stock. With a loss potential of 25%, the stock’s consensus target price stands at $23.12.