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Is Twitter Finally a Buy in 2021?

By Neil Rozenbaum - May 1, 2021 at 11:00AM

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Management might finally have found a way to monetize the platform.

In today's video I will be covering the highlights of Twitter's (TWTR 2.25%) Q1 earnings report and talking about how management might have found a way to turn this ship around. New features and monetization are coming. It's just a matter of when. 

Q1 earnings highlights

Twitter reported revenues of $1.04 billion, up 28% year over year. Average monetizable daily average users (mDAU) reached 199 million, up 20% year over year.

Total US revenue was $556 million, an increase of 19%. Total international revenue was $480 million, an increase of 41%, or 38% on a constant currency basis. Japan remains our second-largest market, growing 30% and contributing $170 million, or 16% of total revenue in Q1.

Total revenue guidance for Q2 is expected to be between $980 million and $1.08 billion.

Monetization

Twitter's main issue over the years has been the lack of monetization. This is expected to change over the next couple of quarters with the addition of some new features. Twitter Revue, for example, gives its members a way to build and share an easy-to-use newsletter. Twitter Spaces is a clubhouse type of feature that enables users to talk about any topic and engage with one another. 

Twitter is also working on Super Follows, tipping, and Twitter Communities. It is worth mentioning that these features will be deployed over a long period, so don't expect a new Twitter overnight.

During Investment Day, Twitter briefly touched on the possibility of shopping on its platform. 

Post-pandemic effect

It's no secret that Twitter relies on the engagement of its users. But with the lack of sporting and cultural events because of the pandemic, that engagement slowed down. But now that we are emerging from this situation, Twitter could benefit from the reopening. Two major sporting events are coming this summer (the Summer Olympics and the UEFA European Championship); this should get engagement back. 

Twitter is no Facebook, Snap, or even Pinterest. It's a platform that has been free for so long, some might say it's almost impossible to monetize. But with these new features in the pipeline, things might actually change for the good for Twitter. 

More insights in the video below. 

*Stock prices used were the closing prices of April 29, 2021. The video was published on April 30, 2021.

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Stocks Mentioned

Twitter, Inc. Stock Quote
Twitter, Inc.
TWTR
$38.23 (2.25%) $0.84
Meta Platforms, Inc. Stock Quote
Meta Platforms, Inc.
META
$160.03 (-0.76%) $-1.22
Snap Inc. Stock Quote
Snap Inc.
SNAP
$13.17 (0.30%) $0.04
Pinterest Stock Quote
Pinterest
PINS
$18.71 (3.03%) $0.55

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

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