It has been well over a month since Twitter Inc (NYSE:TWTR) reported its fourth quarter numbers, beating Street expectations but disappointing some analysts with its lower-than-expected monthly average users, also known as MAU. While many investors are still concerned about Twitter’s slow-down in user growth, some analysts are finding a second wind with the increase in the company’s relevance in the world of TV advertising. Deutsche Bank analyst Ross Sandler sees only good things in the future for Twitter and is recommending BUY Twitter. Whereas, Susquehanna analyst Brian Nowak is still concerned, and only recommends HOLD Twitter.
The question among all of those concerned is, “Can Twitter fix the monthly average user growth?” And analyst Ross Sandler thinks the “answer is a definitive, ‘Yes’”. Ross’s confidence comes from the data gleaned from a survey of U.S. Twitter users that he commissioned. Ross recognizes that “Twitter’s problem is retention, and they’re working on that.” Ross added that “the company has some of the best engineers in silicon valley working on a number of product enhancements, and we believe Twitter Inc (NYSE:TWTR) is going to figure it out.” In addition, he believes that the comScore results are skewed by the combination of the IPO and the release of exciting new features, leading many analysts to have high expectations about user growth.
Using a SurveyMonkey questionnaire, Ross also asked 1,100 individuals about their use of Twitter and found that “overall engagement is very high,” where “nearly 50% of the active Twitter users, use the service more than once a day according to our respondents, slightly below Facebook’s 60% DAU/MAU ratio but relatively common with typical social networks.” With these positive research results in hand, Ross is ready to recommend BUY Twitter Inc (NYSE:TWTR) with a $65 price target. Ross is ranked 107 out of 2467 analysts with a +4.7% average return over S&P-500.
On the other hand, analyst Brian Nowack has his reservations, and is only recommending HOLD Twitter Inc (NYSE:TWTR) . Brian is excited about the growing relationship between Twitter and live television, with shows like the Oscars inciting lots of activity on the social media site. However, Brian is still uneasy saying, “Twitter’s advertising process continues, but user growth remains the question mark. In our view, Twitter’s 1Q:14 user growth will be more important to driving the stock than anything else. Given the infancy of Twitter’s platform and lack of historical data, getting a precise read on quarterly user growth is admittedly difficult.” Brian is ranked 1374 out of 2467 with a 0.0% average return over S&P 500 (INDEXSP:.INX).
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