Twitter Inc (NYSE:TWTR) shares jumped as much as 6% Thursday, and continued to rise on Friday. The upward momentum was driven by Evercore Partners’ report that Twitter Inc (NYSE:TWTR) is well-positioned to benefit immensely from online video advertising. Shares of the microblogging site jumped 6% or $3.85 to $67.50 on Thursday. The stock rose another 3.35% Friday to $69.78.
Twitter to benefit from online video advertising
Twitter Inc (NYSE:TWTR) shares have been on a roller coaster ride since the company went public about two months ago. Evercore Partners analyst Ken Sena said in a research note to investors that Twitter Inc (NYSE:TWTR) has two strong pillars, immediacy and the support from the traditional TV industry. Sena said Twitter Inc (NYSE:TWTR) is likely to become the market leader in short-form online video viewing, with a potential for long-from viewing.
Twitter Inc (NYSE:TWTR) continues to expand with cable MSOs, content providers and data management platforms. The analyst said that new algorithms to formulate and communicate branded campaigns, improved spending efficiency and a jump in online video advertising will help Twitter Inc (NYSE:TWTR). Assuming that the San Francisco-based company captures just 5% of the online video ad revenues, about 17% of its revenue in 2015-16 will come from video ads.
Evercore bullish on Twitter, others cautious
Online video advertising is booming. According to eMarketer, advertisers spent $4.15 billion on online video advertising in 2013, up 43.5% from 2012. Video advertising is expected to rise 40% to $5.8 billion in 2014. Evercore Partners has an Overweight rating on the stock with a $70 price target. Evercore said Facebook Inc (NASDAQ:FB) and Google Inc (NASDAQ:GOOG) will also benefit from the shift of advertising dollars from traditional TV to Internet.
Twitter Inc (NYSE:TWTR)’s sponsored tweets are also attracting advertisers. According to a survey conducted by IZEA, more than 52% of 10,000 participants used sponsored tweets to promote their businesses in 2013, compared to 47% in 2012 and just 39% in 2011. However, a section of experts remain concerned about the company’s valuation. Twitter Inc (NYSE:TWTR)’s shares have bee fluctuating since its IPO. The stock went above $74 on Dec.26, but plunged to $59.07 on December 30th without any major news or change in the company’s fundamentals. Others believe that Twitter Inc (NYSE:TWTR) is deviated from its fundamentals.
