Has Twitter Done Everything Right This Quarter?
Twitter Inc (NYSE: TWTR) is one of the fastest growing social networks in the world, but will that growth be reflected in the company's earnings results?
Sean Udall, CIO of Quantum Trading Strategies and author of The TechStrat Report, has a very positive outlook. He thinks Twitter is a "super dynamic" and "disruptive" company. He also referred to Twitter as his next Google Inc (which proved to be a stellar investment for Udall).
"For my fundamental long-term view, Twitter is already doing everything they need to do," Udall told Benzinga. "The stock is going to work higher over time."
Trip Chowdhry, managing director of equity research at Global Equities Research, is not sure where Twitter will be in two or three years. He wonders what new features, products or services the company might introduce to monetize its innovations.
"I think it's a little early to be euphoric, but I have a feeling that probably some [aspects] of Twitter may be quite positive," Chowdhry told Benzinga. He said that while the buy button is very early, he expects this element to take off over the next six to eight months.
The King Of M&As
Udall said that mergers and acquisitions are two of the things that Twitter does "exceedingly well." Meanwhile, Chowdhry praised Twitter's efforts to shut down Twitpic, which ultimately led to its acquisition.
Asif Khan, CFO of Virtue LLC and CEO of Shacknews.com, thinks Twitter should be a takeover target.
"I believe Twitter offers a really interesting real-time search algorithm that someone like Google should buy," Khan, who is long Twitter, told Benzinga.
More Ads On The Way
By slowly increasing the number of ads displayed in users' streams, Twitter might have an advantage over Facebook Inc.
"My whole thesis for Twitter versus Facebook was that Facebook now can't really jam that many more ads in its platform," said Udall. "They've pretty much maxed out and they said as such on the calls. The difference with Twitter is they've purposely kept the ad load -- the number of ads they're putting into their streams -- very low on the platform."
Udall said that Twitter has started to increase its ad loads. He believes the company has "tons and tons" of room to increase this over time.
"That's a factor that's gonna have a tailwind not just for two quarters, but four to eight quarters," Udall added. "The other thing that's happening is that the ad prices for mobile and social media networks have basically been rising for the last few quarters. That tailwind impacts both Facebook and Twitter, but Twitter probably has more upside because it's a much lower revenue base."
Udall said that some of those benefits may be baked into Twitter's current price, but that does not change his positive outlook.
Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.
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