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Best tech/finance blogger on TipRanks. Alex Cho is ranked 7th among all financial bloggers, with a sector focus of technology stocks. The research he publishes captures the long-term growth potential of tech franchises, and market valuation. His research recommendations over the span of five-years has averaged into an annualized return of 19.3% across 392 ratings of which 66% were successful. Over his years of publishing, Alex Cho has been an indispensable source of information for an investment minded audience, which is why his lifetime viewership has exceeded ten million in total since 2012, across various media platforms. Furthermore, he’s frequently cited in various local business journals across the United States, and is frequently tagged with the “in-depth” designation on Google News for his public articles. The quality of his research is well known, and is well-respected which is why he’s frequently cited by other authors, journalists, bloggers and experts. Alex Cho was a former founding partner of Alexander & Cohen Capital Management, has worked as a consultant for mid-stage tech companies looking to raise capital or form an exit strategy, with the most recent consultation billed to a client that was generating revenue of $10 million+ in the web domain/registrar segment. Alex Cho is frequently invited to interview members of management at various Fortune 500 tech companies’ due to his outstanding media credentials, and credibility. Furthermore, he frequently attends various tech media events at the request of the event organizers. Alex Cho has a great relationship with Wall Street and Silicon Valley, as well. In the Venture Capital Space, he has sources that are inclusive of VC Partners, and independent research from PitchBook, Mercury Data, eMarketer, MergermarketGroup, and so forth. Anyone facing the public with investment related material needs quality sources, which should be inclusive of insights from Private Equity and various sell-side institutions and debt rating agencies as well (Standard & Poor’s, Fitch, & Moody’s). Alex Cho publishes with the support of Bank of America Merrill Lynch, Morgan Stanley Americas, Royal Bank of Canada Capital Markets, United Bank of Switzerland AG, Barclays Americas, Goldman Sachs, J.P. Morgan, Credit Suisse AG, PiperJaffray, Wedbush Securities, Oppenheimer & Co., Nomura Securities, BMO Capital Markets, Raymond James, Pacific Crest, SunTrust, Mizuho Securities, Deutsche Bank and Canaccord Genuity. Alex Cho attended ASU via the MAPP program with a 3.76 GPA in business-finance. The genius behind Cho has less to do with his academic accomplishments, but rather his ability to navigate, adapt, and improve the quality of his work through all the activities he has engaged. In the past year, Alex Cho has launched a new marketplace service referred to as Cho’s Investment Research. To learn more about this service, or to receive article notifications, be sure sure to subscribe. We provide frequent updates via our Blog Posts, which goes out to our subscribers.

Twitter (TWTR) Stock Is Unstoppable… for Now

The bird that keeps giving.

Twitter (TWTR) beat expectations on its Q1’19 earnings Monday, posting dil. EPS of $0.25 versus consensus expectations of $0.15. The social media giant grew revenue by 18% versus expectation of 16.6% for the quarter. Overall, the company posted revenue of $787 million, slightly beating consensus expectation of $775.23 million.

Twitter offered financial guidance for Q2’19 with revenue guided at $770 million to $830 million and operating income to be between $35 million and $70 million. Consensus analysts are anticipating Q2’19 revenue of $819 million, so the high-end of the guidance range also beat consensus estimates as well.

Twitter rallied following the earnings release, as investors had more modest expectations tied to financial results but were quickly surprised by a number of factors that had materialized during the earnings presentation.

The advertising narrative continued to improve, even as they disclosed that the cost per engagement fell, the overall increase in ad CPM purchases did have a positive effect on earnings. At least, according to Twitter, “Year-over-year growth accelerated in the US relative to Q4, with ad revenue up 26%. By product, video ad formats continued to show strength, notably from our Video Website Card and in-stream pre-roll ads.” Also, Twitter disclosed that international ad revenue grew by 10%. The sudden resurgence or strength from just U.S. advertising was more reassuring, as it dismissed concerns that advertisers would scale back spend on the platform due to advertising ROI.

Wedbush analyst Michael Pachter mentioned in a research note:

Profit upside was driven by the revenue outperformance, along with the shifting of certain expenses out of the quarter, and initial GAAP operating expense guidance that incorporated overly conservative assumptions. Ad engagements were up 23% y-o-y, compared with up 33% y-o-y last quarter, and up 69% y-o-y last year, while cost per engagement was down 4% y-o-y, compared with down 7% y-o-y last quarter, and down 28% y-o-y last year. Taken collectively, the ad pricing decline and impressions growth in Q1 suggests higher ROI for advertisers.

Another surprise from the quarterly earnings announcement was the growth in monetizable daily active users. Twitter reported monetizable daily active users of 126 million in Q4’18, which then grew to 134 million in Q1’19, representing 6.3% sequential growth in daily users from prior quarter. Twitter mentioned that it will no longer report monthly active users in their quarterly reports.

Morgan Stanley analyst Brian Nowak mentioned in a report following Twitter’s earnings report:

Adjusting our model, we increase our ‘19/’20 revenue by 1%/1% on faster user growth. We now forecast ad revenue to be up 18%/15% in ‘19/’20 (vs. our prior forecast of 17%/14%). Out increased top-line forecast (opex largely unchanged) translates to 4%/3% higher EBITDA in ’19/’20. Our $32 PT implies TWTR trades at 11.7x ’20 EBITDA, which is relatively in-line with the peer regression implied multiple.

While Nowak remains bearish on Twitter, or has concerns tied to the business multiple, analysts are looking towards the future, and adjusting model estimates higher following the company’s earnings report. Sustained revenue growth within the implied guidance range of 18% growth y/y will keep the stock grounded for the foreseeable future.

Bottom line

While the valuation could be subjectively debated, it’s worth noting that Twitter’s underlying business narrative is improving, as growth metrics did accelerate in Q1’19. Since Twitter is a growth stock, and advertising fundamentals seem stable or could accelerate beyond the guidance offered in Q2’19, we’ve finally reached an inflection point in the company’s history. Sure, it’s not going to be nearly as dominant as Facebook, but I think shareholders accept that fact, and would prefer a mature growth business that steadily grows revenue and earnings at a mid-teen pace. So as long as Twitter delivers on those expectations the valuation will continue to trend higher.


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