Shares of Twitter Inc (TWTR) reached a new 52-week high of $52.58 on Tuesday, Dec 10, 2013. Most significantly, Twitter succeeded in crossing the psychological barrier of $50.09, which it reached on the very first day of trading (Nov 7).
The closing price of Twitter on Dec 10 was $51.99, representing a return of about 15.8% since its Initial Public Offering (IPO). The company offered 70 million shares for $26.00 at the IPO. Currently, this Zacks Rank #3 (Hold) stock has a market cap of $26.77 billion.
Key Growth Catalysts
Twitter’s bullish run is primarily driven by its latest product offerings. Last week, Twitter launched a new feature called “tailored audiences”, which aims at helping advertisers target potential customers on the company’s network.
The company recently announced that its users now can send pictures privately through direct messages. Twitter’s updated mobile app gives direct messaging significant prominence, which improves its competitive position against the likes of Line, WhatsApp and Snapchat.
We believe that these new mobile products will boost customer engagement and drive user base, which will fetch more advertising revenues, going forward. Mobile advertisement contributes approximately 70.0% of Twitter’s revenues.
Market research firm, eMarketer, expects Twitter to generate advertisement revenues of $582.8 million this year. For 2014, advertisement revenues are expected to grow 63.0% to $950.0 million. Twitter is expected to earn advertisement revenues of $1.33 billion by 2015.
Moreover, we believe that the company has significant growth opportunity in international markets. Twitter believes that higher investment on sales support and marketing activities in the international markets such as Australia, Brazil, Canada, Japan and the United Kingdom will boost revenues, going forward.
The Zacks Consensus Estimate has remained steady at a loss of 9 cents over the past 30 days. For fiscal 2013, the loss estimate improved 2 cents to 74 cents per share over the same time frame.
Other Stocks to Consider
Some better-ranked stocks in the technology sector include Netflix (NFLX), Facebook (FB) and AOL Inc. (AOL). While Netflix and AOL carry a Zacks Rank #1 (Strong Buy), Facebook holds a Zacks Rank #2 (Buy).