Please ensure Javascript is enabled for purposes of website accessibility

Why Twitter, Inc. Stock Jumped 12% Tuesday

By Daniel Sparks – Apr 17, 2018 at 4:06PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This analyst expects double-digit revenue growth from Twitter in 2018.

What happened

Shares of social network Twitter (TWTR 2.57%) jumped as much as 12.2% on Tuesday following a bullish analyst note on the stock. At 3:51 p.m. EDT, the stock is up 11.8%.

Morgan Stanley analyst Brian Nowak changed his rating for Twitter stock from underweight to equal weight. To justify his upgraded rating, Nowak cited expectations for improving user growth and ad sales. Specifically, Nowak is optimistic about Twitter's video ads.

These factors make Twitter stock "a more compelling risk/reward," the analyst said (via CNBC).

A woman using her smartphone while she is walking

Image source: Getty Images.

So what

After revising estimates for Twitter's business in 2018, Nowak now expects the company's revenue during the year to be $2.75 billion, up more than 2% from his previous forecast for revenue of $2.69 billion. The revised revenue number would be up 13% compared to Twitter's revenue in 2017. 

Twitter surprised investors in its fourth quarter when it suddenly returned to revenue growth. Total revenue climbed 2% year over year -- a significant improvement to Twitter's 5% and 4% year-over-year declines in revenue in the company's second and third quarters of 2017, respectively. 

Now what

Investors will get to see very soon if Twitter really is growing nicely in 2018. The company is scheduled to report its first-quarter results on April 25, before market open.

On average, analysts are expecting Twitter to report first-quarter revenue and earnings per share (EPS) of $605 million and $0.11, respectively. This compares to revenue and EPS of $548 million and $0.07 in the year-ago quarter.

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Twitter. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Twitter, Inc. Stock Quote
Twitter, Inc.
$43.84 (2.57%) $1.10

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.