Twitter: The Next Big Financial Services Company?
Twitter Inc (NYSE: TWTR) has risen more than 30 percent this year as investors recognize the company's improving results. Cathie Wood, founder and CIO of ARK Investment Management, thinks it is just the beginning.
"In the last quarter, the sales surprised on maybe five percent on the upside," Wood told Benzinga. "But their EBITDA surprised by 35 percent."
Wood credited its CFO, Anthony Noto, with some of Twitter's success. "I have known Anthony Noto for lots of years," she said. "We were both publishing back analysts in the day. He was at Goldman Sachs, and I was at Jennison Associates. I think he's going to bring a lot of discipline [to Twitter]."
Wood said that there was evidence of Noto's discipline in Twitter's Q4 results.
"[We're] already seeing financial controls come into play," she added.
"We're also seeing a lot of creativity. I think they're now focused on this new monthly active user count and [they] are determined to get that back up. They're introducing video, private messaging, instant timelines for new users, logged out home pages. And while you're away, summaries based on a person's individual interests."
Twitter: The Next Great Financial Services Firm?
Wood explained how ARK Investment Management uses Twitter to its advantage.
"We are getting information from Twitter that we are using in our analysis here that we would never get in a financial firm," she said. "It's just because we're following people or being passionate about these themes. They go into areas of research and sources that we just never would see in the financial world."
Not everything is useful to investors.
ARK Investment Management screens out the "really productive users and followers" and separates them from the rest.
"We're coming up with really interesting insights that we wouldn't have otherwise," Wood added.
"We think Twitter is going to move not just into the mainstream but also into verticals like the financial services world." In short, Wood said that her firm is "using Twitter and embracing it."
"We see huge value add," she concluded. "We think it's going to be a huge stock."
Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.
Image credit: Matthew Keys, Wikimedia
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