Twitter stock is in a baying range after a steep selloff
The Twitter stock price fell more than 20% after releasing third-quarter results as its daily active users missed analysts’ consensus estimates.
Meanwhile, the surprise share price selloff has opened an attractive buying opportunity for new investors in the analyst’s view.
The market analysts are expecting the Twitter stock to rebound in the days ahead because the third-quarter numbers were not bad. The shares of the social media company are currently trading around $40, down sharply from a 52-weeks high of $52 a share. The Twitter stock price is up 30% so far this year despite the latest selloff.
Third-quarter numbers indicate strong ad revenue growth
The company’s financial performance is totally dependent on ad revenues. Twitter has generated third-quarter revenue of $936 million, driven by a 15% year over year increase in advertising revenue. Its advertising revenue stood around $808 million in the third quarter.
“Advertisers significantly increased their investment on Twitter in Q3, engaging our larger audience around the return of events as well as increased and previously delayed product launches, driving revenue to $936 million, up 14% year over year,” said Ned Segal, Twitter’s CFO.
Moreover, its earnings per share of $0.19 topped analysts’ consensus estimate by $0.14 per share. Despite robust revenue and earnings growth, the investors reacted to daily active users that stood around 187 million by the end of the quarter, missing analyst’s expectations for 195 million users.
Analysts see the dip in Twitter stock as a buying opportunity
The market analysts have applauded its financial performance and recovery in ads revenues.
For instance, Deutsche Bank has provided a price target of $64 – implying almost 40% upside from the current price. The bank says investors should focus on 29% growth in daily active users instead of concentrating on consensus estimates.
Pivotal Research has also set a high price target of $64, noting the “extremely strong revenue and EBITDA quarter” that topped top-line estimates by 20% and EBITDA by 80%.