Twitter [NYSE: TWTR] is one of the better performers today. The company beat expectations both in terms of revenues and user numbers. The company’s user numbers have grown by 9 million, even as analysts were expecting a decline. While releasing the results, Twitter also announced a shift in how it will be reporting user numbers. The company wants to shift to daily active users that receive adverts, when reporting user numbers. This is a big deal because, it offers investors a glimpse into twitter user engagement, and how much value those users contribute to the company’s bottom-line. These announcements have pushed Twitter up by over 16% as at the close of trading yesterday.
From a look at the company’s fundamentals, Twitter has a high probability of pushing higher going into the future. For instance, the company’s low debt levels gives it the leeway to withstand any rate hikes going into the future. The company has a debt ratio of 4.69. This means it has the financial capacity to pay its debts multiple times over, and still maintain financial stability. This not only guarantees it of stability in a high interest rates environment, it also puts it in a good position to access financing with ease for investments going into the future.
The company revenue also place it in a unique position for growth in the long run. Revenues are part of what investors look at, when analyzing a stock. Twitter has revenues of $3.04 billion, and a quarterly revenue growth of 24.20%. Based on the company’s growing user-base, there is a high probability that its revenue growth will remain consistent going into the future. Still on revenues, the company has a healthy profit margin of 39.63% and with its growing user base, Twitter has a high probability of maintaining its high profit margins.
Analyzing the company from a technicals perspective, the company has some solid support and with its current growth numbers, it is likely to hold. The company has solid support on the 3-month 50-day moving average at $32.83, and some even stronger support on the 3-month 200-day moving average at $31.95. The company also has a low beta, which is an advantage under current market conditions. That’s because, after a huge surge in value for the last decade, there is a probability of a correction at some point. In such a market scenario, low beta stocks are likely to hold their value better.
All these positive aspects to Twitter reflect in analysts’ expectations of the stock. Majority of analysts believe that Twitter is a strong buy. Several others have upgraded their expectations of Twitter. For instance, Bank of America upgraded from underperform to buy. Other’s like Pivotal Research upgraded it from sell to hold an indicator of its growing adoption in the market. This indicates growing confidence in Twitter (TWTR) as an investment. Its fundamentals, especially its growing user numbers support the positive sentiment that analysts hold of Twitter in the short-term.