Twitter stock forecast: will ambitious targets be met?

There’s been steep declines in the Twitter stock forecast. But how are analysts reacting?

The Twitter stock forecast has been experiencing a fair bit of turbulence of late.

Heat is starting to escape tech stocks right now, and the micro-blogging site isn’t immune from these sell-offs. On 3 May, TWTR ended the day 15% lower, closing at $54.58.

Worse still, the current Twitter share price of $52.32 is about 35% lower than the all-time highs of $80.75 that were seen earlier this year.

In this article, we’re going to reveal the latest Twitter stock predictions, examine how the social network performed in the first quarter of 2021, and explore whether a flurry of new features can help the platform remain relevant in an increasingly competitive market.

Twitter share price forecast: How it performed in Q1

As with other social networks, the Twitter stock price forecast is largely driven by the state of advertising revenues. But here’s the problem: TWTR’s performance between January and March largely left analysts disappointed.

Interestingly, Twitter’s chief financial officer Ned Segal appeared to link this directly to the riots that were seen at the US Capitol on 6 January – events that ultimately led to one of its most famous users, former President Donald Trump, being booted off the platform.

He told analysts:

“What we've noticed in the past is when there is unrest for one reason or another… that advertisers around brand, they often pause when there’s a more important conversation than the conversation around their product.”

This could end up serving as a double-edged sword when it comes to the Twitter stock forecast going forwards. Although this doesn’t necessarily mean that the slowdown in ad spending will last for the rest of the year, it makes projecting revenues difficult because of how unexpected events could cause campaigns to be pulled.

There were still some relatively healthy Q1 figures for investors to pore over. On average, the number of monetisable daily active users hit 199 million – that’s up 20% on the same period a year earlier. Meanwhile, total revenue rose 28% year on year to $1.04bn. Of this, advertising revenue came in at $899m – with the 32% surge on 2020 levels attributed to an increase in ad engagements, and the cost associated with each one. The social network also says it has enhanced the ad formats on offer, improved the tools used to gauge a campaign’s performance, and introduced new controls that can help a company ensure their ads aren’t used in inappropriate places.

Twitter’s CEO Jack Dorsey added:

“People turn to Twitter to see and talk about what’s happening, and we are helping them find their interests more quickly while making it easier to follow and participate in conversations.”

So if more people are joining this social network, and revenues growth is outpacing rising expenses, why has Twitter’s stock price taken such a beating since the results emerged?

Well, some of those making Twitter stock forecasts argue that the brand is currently overvalued, and that it is failing to deliver the numbers that justify such a hefty price tag. Even now, some analysts believe a further pullback is needed for its valuation to be realistic.

The lack of momentum in Twitter’s stock price may also be linked to fears that this social network has failed to build a lucrative advertising model like Google and Facebook. It might also be the case that sectors with the biggest marketing budgets aren’t being drawn to this site as much as others. A lot of this is down to how Facebook offers direct response advertising, while Twitter doesn’t.

Thankfully, there are signs that Twitter isn’t sitting still as it battles to ensure that its platform remains appealing to its hundreds of millions of users. According to a Bloomberg report in April, Twitter has considered snapping up the audio social network Clubhouse for a cool $4bn. Even though those talks eventually fell through, the platform has now launched Spaces – a feature where users with more than 600 followers can engage in real-time conversations with others.

Other innovations will prove crucial if Twitter is going to grow its army of active daily users to 315 million in the next two-and-a-half years. High-profile content creators can now add a Tip Jar to their profiles in order to receive contributions from followers who appreciate their work. This could entice a greater cross-section of celebrities, influencers and journalists to share original content on the platform – and in turn, this could draw in new users.

Trade Twitter - TWTR stock price

Twitter
Daily change
53.79
Low: 53.63
High: 53.9

FAQ

Is Twitter stock a good buy?

It’s interesting to note that a number of funds have reacted to Twitter’s share price slump by buying up stock. Among them is Cathie Wood’s Ark Invest, which bought 1.3 million shares for $71m after the 15% crash on 3 May. Whereas such aggressive sell-offs can often scare some investors away, Wood tends to use such opportunities to increase exposure – taking a long-term view on a company’s potential.

Overall, sentiment among analysts is rather mixed. While 10 have a buy rating in place and one says it will outperform the market, 27 analysts have a hold rating on TWTR, and four recommend selling up.

Does Twitter stock pay a dividend?

Twitter doesn’t pay dividends – and never has. 

Will Twitter stock go up?

There appears to be cautious optimism when it comes to what Twitter’s share price can achieve over the next 12 months. The median view indicates that we’ll see a 23.2% boost to $65. Meanwhile, the most pessimistic outlook warns of a 43.2% fall to $30.The most bullish forecast out there anticipates a 57.3% rally to $83 – but even then, TWTR will only narrowly be ahead of the all-time highs that were set earlier this year. 

What is the Twitter stock forecast for 2025?

It’s impossible to know where TWTR will be in four years’ time. With user numbers increasing during the coronavirus pandemic as people sought the latest information, the social network does have an opportunity to convert these accounts into longer-lasting users. However, there’s always a danger that a more cutting-edge platform could come along and wrestle away market share from Twitter. We’re also yet to see whether Donald Trump’s ban has a damaging effect on the business in the years to come.

Should Twitter manage to reach its goal of welcoming 315 million users to its platform by 2023, the outlook could look bullish in the years ahead.

FURTHER READING: Bank of America stock forecast – will it go up or down, and is it worth buying?

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