Twitter Inc (TWTR) Fiscal 2015 Estimates Raised; Stock Surges


The stock price of Twitter Inc (NYSE:TWTR) surged after analysts at Stene Agee raised their fiscal 2015 estimates for the microblogging company citing the reason that they have greater confidence on its ability to grow its user base over the long-term.

The shares of Twitter Inc (NYSE:TWTR) were trading $42.21 per share, up more than 3% at the time of this writing around 3:04 in the afternoon in New York.

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Twitter’s global MAUs

Sterne Agee analysts Arvind Bhatia and Bret Strauser estimated that Twitter Inc (NYSE:TWTR) would be able to deliver $2.045 billion in revenue and $485.8 million EBITDA for the fiscal 2015.

They estimated that the monthly active users (MAUs) of Twitter Inc (NYSE:TWTR) would increase from 255 million to 400 million by the end of 2018.

The analysts believed that the recent product changes implemented by the microblogging company were beneficial in reducing the churn and growing its user base. Bhatia and Strauser noted that the FIFA Wold Cup helped Twitter Inc (NYSE:TWTR) improved user engagement.

According to the analysts, they perceived potential improvement in the second quarter results of Twitter Inc (NYSE:TWTR) in terms of user growth, retention and monetization. They are also hopeful that the improving trend for the microblogging company is sustainable.

Analysts’ estimates

Bhatia and Strauser maintained their Neutral rating for the shares of Twitter Inc (NYSE:TWTR) due to its current valuation, but they emphasized a potential upside over the long-term.
The analysts raised their Fiscal 2015 revenue estimates to $2.1 billion from $1.9 billion and adjusted EBITDA to $485 million from $423 million to reflect the improving monetization on the platform of Twitter Inc (NYSE:TWTR).

Twitter’s platform changes help

Bhatia and Strauser said the product changes implemented by Twitter Inc (NYSE:TWTR) to improve retention and engagement on its platform are helping. The analysts mentioned the effort of the company in reducing the steps for its mobile sign-up process and focusing on bringing richer media forward.

“We think the company’s focus in the conversations on the platform and improved organization of the content is leading to improved user experience. We have experienced this first-hand with the ongoing FIFA World Cup for which the company has tried to create a destination experience,” according to the analysts in a note to investors.

The analysts also predicted that Twitter Inc (NYSE:TWTR) would experience strong growth and obtain significant opportunity to monetize.

Bhatia and Strauser estimated that the company could generate nearly $6 billion in advertising revenue by 2018, approximately 3% of the worldwide digital advertising market. They projected that Twitter’s MoPub exchange would obtain one billion iOS and Android users. The analysts also estimated that it can generate adjusted EBITDA margins of 40% by 2018.