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Twitter Stock Is On a Tear, But Is It a Buy?

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Twitter (NYSE: TWTR ) has been around for a dozen years at this point. In Silicon Valley years, that makes it an oldster on the tech front. But the micro-blogging site hasn't seen the kind of meteoric rise that some of its contemporaries have seen. Its rise has been tempered with long bouts of doubt as other platforms have appeared on the scene and competition for the space has increased.

But the remarkable thing about TWTR, with its original 140 character limit, is that while it has tried to adapt and compete, the best thing that has happened to it (and TWTR stock) is that it has essentially stayed the same.

In an era when iteration takes everything from what it was to something barely recognizable, TWTR has made a few changes to its platform, but it is starting to be rewarded for allowing its followers to adapt the platform to their desires, rather than the company chasing customers' desires.

And with Jack Dorsey back at the helm, this rational approach to the platform has also helped Twitter start to gain traction with advertisers as well.

To be sure, there are plenty of other social media platforms around and trying to remain relevant to younger audiences that tend to adopt anything new - for a time - as well as older audiences that have disposable income and more staying power is a very difficult fence to straddle.

Analysts love growth, especially in these new tech spaces. If you're not building your monthly and daily active users, you're dying - at least in their eyes. A lot of this is built off the early social media models like Facebook (NASDAQ: FB ).

There, the company's valuation was directly tied to its user base and its amazing growth. But when FB went public, there were a couple very tough years because no one - Facebook or its advertisers - could figure out how to monetize it. It took a while and now targeting audiences is where the money is, not splashing ads across the entire platform.

Twitter stock has an even more recent example. This year, after watching FB get hit with yet another privacy scandal and issues with suspicious accounts and actively seeking out sketchy business partners, TWTR decided to create a health initiative on its user base.

Bottom Line on TWTR Stock

The reasoning is simple. If you get rid of all the trolls and bots and shady customers, your customers are likely to have a better experience and your advertising revenue should improve.

But cutting your active users drives analysts insane. And so it did when TWTR announced its initiative. It lost 9 million monthly active users (globally, from 335 million to 326). Its U.S. numbers were down from 68 million to 67 million.

Twitter stock sold off.

However, going into the final quarter, TWTR stock is about to have its first year where every quarter turned a profit. Margins are increasing. Total revenue is up.

This is why TWTR stock is still an A-rated holding in my Portfolio Grader, and why it's up nearly 15% year-to-date despite the hard slam the market has experienced toward the end of 2018. And there's still plenty left to look forward to.

Louis Navellier is a renowned growth investor. He is the editor of four investing newsletters: Growth Investor , Breakthrough Stocks , Accelerated Profits and Platinum Growth . His most popular service, Growth Investor, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com . Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.

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The post Twitter Stock Is On a Tear, But Is It a Buy? appeared first on InvestorPlace .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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