Whether you’re going on Twitter Inc (NASDAQ: TWTR) searching for the latest tweets from Donald Trump or memes from Elon Musk, it’s clear that the platform plays an important role in connecting the world.
If you’re on the fence about investing in the company, here are three reasons to buy Twitter stock:
It Keeps Getting More Popular
Twitter’s daily active users grew 21% since the same quarter last year. The company’s management cited a continued increase in relevance in the Home timeline and notifications — new features allowing users to follow topics, not just accounts, and a new recommendation engine that provides topic suggestions in the timeline.
“We believe that easier comps and a positive event calendar in 2H20 such as the U.S. presidential election and the Tokyo Olympics will likely be catalysts for DAU growth,” Mizuho's James Lee said in a Feb. 6 note.
It Has More Revenue Potential
A solution to Twitter’s revenue-gouging problem is on the way. Twitter was facing technical issues with its Mobile App Promotion API.
“As a result, international revenues decelerated, but U.S. revenue growth was strong and offset the weakness. The company is working on rebuilding its ad server and a new version of MAP ads, which is expected to make it much easier/faster for advertisers to launch campaigns on the platform,” Lee said.
They’re Investing Wisely
Twitter is building a new data center that will aid in the company’s efforts to complete the rebuild of its ad server in the first half of 2020.
“This is an important investment as we expect this new infrastructure to enable TWTR to develop/test/iterate products at a materially faster pace,” Brian Nowak of Morgan Stanley said in a Feb. 7 note.
What's Next For Twitter Stock:
Keep an eye out for updates on the company’s Mobile App Promotion API that involves fixes to the platform.
“It will be important to monitor TWTR's new ad product test sand announcements throughout 2020 to determine whether they are delivering on this and increasing the reasons for advertisers to join TWTR and scale spend on the platform,” Nowak said.
- Nowak has a Hold rating on Twitter with a $34 price target.
- Lee has a Sell rating and $35 price target.
Twitter Price Action
Twitter shares were down 3.11% at $35.88 at the time of publication Monday.