It’s time to break down a major social media company. Here is the break down on $TWTR, otherwise known as Twitter.
Current Price: $70.59
52/Wk High: $80.75
52/Wk Low: $25.06
Market Cap: $56.3 Billion
Read below for the breakdown!
Twitter ($TWTR) is a major social media company that offers multimedia services to users while providing customers with advertising, data, and developer services.
Sifting through Twitter’s stock price according to TREFIS (@trefis) 50% of the stock price is based on the United States Region.
Furthermore, 37.4% of Twitter's stock price is based on the International Region while just 12.7% is based on Twitter's cash and net of debt.
In recent news Bloomberg reported that Twitter was previously in talks to acquire new social media company Clubhouse for around $4 billion. Unfortunately, those talks fell through, sending Twitter slightly to the downside.
Taking a look at recent advancements to the Twitter platform, the company has introduced Twitter Spaces, which seems to be gaining traction.
As for the future, Twitter recently announced plans to release a paid content system, allowing users to charge for content. Other upcoming features include the ability to create and join groups of specific interests.
Of recent, Twitter stock has come back into favor, rallying a strong 36.8% in the past three months and a whopping 150% over the past year, leaving investors to wonder if Twitter is still a buy.
Digging into the numbers Twitter beat Q4 2020 expectations with an EPS of $0.38, better than the analysts EPS consensus estimate of $0.31. On a year over year basis, EPS improved by 52%.
Revenues were solid as well, increasing 28% year over year to a strong $1.29 billion for Q4. For comparison, the Q4 2019 revenues level was $1 billion, representing an increase of just 10.84% YoY at the time.
As for income, GAAP operating income totaled $252 million, representing a significant increase from the $152 million operating income of Q4 2019.
As for margins, Twitter reported a solid operating margin of 20%, representing a significant jump of the 15% operating income from Q4 2019.
Net income improved as well, jumping to $222 million from $119 million, in turn creating an improved net margin of 17% compared to the same time 2019 level of 12%.
User engagement and growth improved significantly as well, with monetizable daily active usage (mDAU) growth of 27%, representing 192 million mDAU’s in Q4.
Leadership also reported total ad engagements increasing by 35% year over year along with cost per engagement (CPE) declining 3% year over year.
Rounding out the quarter, net cash flow from operations totaled $330 million representing a significant jump from $277 million in Q4 of 2019. Finally, adjusted free cash flow unfortunately declined to $38 million from $127 million.
On the full year, FY2020 revenues increased by 7% year over year to $3.72 billion. While revenues did increase on the full year, Twitter continued to run a net loss of $1.14 billion.
Shifting into the balance sheet the numbers are solid.
Total Debt: $3.487 Billion
Total Liabilities: $5.409 Billion
Total Assets: $13.379 Billion
Cash & Short Term Inv: $7.472 Billion
On a valuation basis, Twitter does trade at a premium.
Forward Price to Earnings: 58.76x
Price to Sales: 15.25x
Price to Book: 7.09x
Price to Cash Flow: 39.13x
Management could be more effective.
Return on Equity: -13.62%
Return on Assets: -8.71%
Return on Invested Capital: -9.75%
Given the numbers the analysts are bullish with a mean price target of $73.30/share, representing a 3.33% upside.
The high price target is $112/share, representing a 57.88% gain, while the low price target is $52/share, representing a -26.70% loss.
The big money is quite involved as well with 73.29% of Twitter being owned by institutions. Top holders include The Vanguard Group, BlackRock Institutional Trust, and Morgan Stanley Investment Management.
On a technical basis Twitter is solid. According to the six-month charts the MACD recently shifted back to the upside with minimal momentum within a range of 0.6922 down to -0.0438.
The six-month charts are also indicating an RSI of 62.7 and CCI of 118.66, both of which are on the high end.
In short, Twitter ($TWTR) is a strong social media company with an increasing user base, expanding revenues, and a slightly unique platform that continues to entice users.
EAT - SLEEP - PROFIT
Disclaimer: This is not direct financial advice, simply an opinion based on independent research.