How The Coronavirus Crisis 'Underscores The Value Of Twitter'
Twitter Inc (NYSE:TWTR) withdrew its first-quarter guidance and said the coronavirus outbreak has weighed on the social media giant’s ad revenue in recent weeks. On Tuesday, one analyst said the outbreak has actually highlighted Twitter’s long-term value as a platform.
The Twitter Analyst
BofA Securities analyst Justin Post reiterated his Buy rating and $30 price target for Twitter.
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The Twitter Thesis
Post said the fact that Twitter will miss its first-quarter guidance was no surprise given the outbreak. At the same time, the fact that Twitter disclosed 164 million monetizable daily active users was a bright spot for the company. Consensus estimates were calling for 156 million mDAU.
In the near term, Post cut his 2020 and 2021 Twitter revenue estimates from $3.103 billion and $3.739 billion to $2.892 billion and $3.707 billion, respectively. He also dropped his 2020 EPS estimate by 14.2% to 36 cents and his 2021 EPS estimate by 1.4% to 70 cents.
Given the platform’s ties to brands and special events, Post said advertising revenue will likely continue to be pressured in coming quarters. Japan announced the 2020 Summer Olympics, a major money-maker for Twitter, will be postponed.
But Post said Twitter’s value as a real-time information source has shined throughout the crisis.
“We think the current health crisis underscores the value of Twitter, and with expanding product offerings (trends, stories), we see Twitter as well positioned for when event schedules eventually return,” Post wrote in the note.
Twitter usage likely hasn’t gotten hurt by the coronavirus outbreak. However, with guidance officially withdrawn, investors will have to wait and see just how much of an impact the virus has had on the company’s ad business.
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