Twitter shares hit an all-time high on Thursday after the social media giant said it forecasts total annual revenue to reach $7.5 billion or more by 2023 and the number of monetizable daily active users to reach 315 million or more in the last quarter of 2023.
Ahead of Analyst Day this afternoon, Twitter has set its high long-term objectives for daily users and revenue.
Following this optimism, Twitter shares surged over 65% in 2020 and added another 40% gain so far this year. The stock hit an all-time high of $80.75, rising over 12% on Thursday.
“We aim to deliver 315M or more mDAU in Q4 2023, which represents a ~20% compound annual growth rate from the base of 152M mDAU we reported in Q4’19, which was our most recent reported mDAU metric when we first shared our ambition in March of 2020,” the announcement was made in an SEC filing.
On February 9, the social media giant reported earnings per share of 38 cents on revenue of $1.29 billion in the fourth quarter, beating Wall Street’s consensus estimates for 29 cents on revenue of $1.18 billion. Moreover, monetizable daily active users rose more than 25% to 192 million in the December quarter, just short of consensus estimates of 193.5 million.
Twitter forecasts revenue in the range of $940 million and $1.04 billion in the first quarter. That compared with analysts’ estimates for $964.6 million.
“Given the hiring and investment decisions made in 2020 and previous years, along with anticipated 2021 headcount growth, we expect total costs and expenses to grow 25% or more in 2021, ramping in absolute dollars over the course of the year,” Twitter said.
Twitter Stock Price Forecast
Thirty-three analysts who offered stock ratings for Twitter in the last three months forecast the average price in 12 months of $65.16 with a high forecast of $95.00 and a low forecast of $50.00. The average price target represents a -17.50% decrease from the last price of $78.98. From those 33 analysts, 12 rated “Buy”, 19 rated “Hold” and two rated “Sell”, according to Tipranks.
Morgan Stanley gave the base target price of $54 with a high of $79 under a bull scenario and $39 under the worst-case scenario. The firm gave an “Equal-weight” rating on the social media giant’s stock.
Several other analysts have also updated their stock outlook. BMO raised the price target to $75 from $45. Twitter had its price objective upped by Loop Capital to $95 from $56. They currently have a buy rating on the social networking company’s stock. JP Morgan Chase reissued a buy rating and set a $77 target price. Deutsche Bank boosted their price objective to $76 from $65 and gave the stock a buy rating.
“Lack of Negative Revisions and Relative Valuation: Valuation continues to be expensive, but we think investors are likely to continue to pay a premium for TWTR given 1) continued turnaround progress and 2) platform scarcity,” said Brian Nowak, equity analyst at Morgan Stanley.
“Execution Risk Remains Around Driving Advertiser ROI: Advertiser ROI has clearly improved on Twitter, but the company needs to improve ad targeting and measurability to compete with the larger players. To do that it will have to further personalize the content that users see and use its data more effectively, both of which remain key strategic challenges (and priorities) for management.”