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Twitter Inc TWTR

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Twitter Posted Strong Q1, but User Growth Will Weaken; Maintaining $52 FVE; Shares Overvalued

Ali Mogharabi Senior Equity Analyst

Analyst Note

| Ali Mogharabi |

Twitter reported strong first-quarter results, although as expected, ad revenue growth was not as impressive as its peers in the social media segment. As we had anticipated, the firm is now seeing a return of brand advertising on its platform due to the economic recovery, with continuing improvement in direct response as well. Solid demand combined with strong growth in users drove total revenue above the FactSet consensus estimate. While the firm provided user growth guidance for the remainder of 2021 below market expectations, we think this weakness will be offset by continuing improvement in user monetization. We have not made significant changes to our model and continue to value Twitter at $52 per share. The stock is down more than 11% in after-hours trading but remains overvalued in our view.

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Company Profile

Business Description

Twitter is an open distribution platform for and a conversational platform around short-form text (a maximum of 280 characters), image, and video content. Its users can create different social networks based on their interests, thereby creating an interest graph. Many prominent celebrities and public figures have Twitter accounts. Twitter generates revenue from advertising (90%) and licensing the user data that it compiles (10%).

1355 Market Street, Suite 900
San Francisco, CA, 94103
T +1 415 222-9670
Sector Communication Services
Industry Internet Content & Information
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2020
Stock Type Speculative Growth
Employees 5,500