How To Research A Stock From Scratch: Twitter

TL;DR

Research Twitter stock from scratch by examining its business model, recurring revenue, profitability, free cash flow, market performance, leadership, revenue growth, and valuation. The review identifies advertising as roughly 90% of revenue, alongside licensing and data, while noting that the stock rose from about $23 to $60 over five years. Read on for the specific checklist, opportunities, and risks behind the investment analysis.

Transcript

a good investment and worthy of your investment dollar i don't know but we're going to research it from scratch to find out my name is brian feroldi my name is brian stoffel thanks to stockcard.io for sponsoring today's video brian you and i have a pretty good understanding of what twitter the business is and what the twitter the company does becau... Read More

Key Insights

• 🎏 Twitter's diverse revenue streams, including advertising, licensing, and data partnerships, contribute to its financial stability.
• 💨 The company's recent focus on new features, such as Twitter Blue, Tip Jar, and Ticketed Spaces, demonstrates its commitment to finding innovative ways to engage users and monetize the platform.
• 💁 Twitter's network effect is driven by influential users and professionals, making it a valuable platform for connecting with strangers and forming meaningful connections.

Questions & Answers

Q: How do you research Twitter stock from scratch?

Start by identifying Twitter’s business model and then assess recurring revenue, profitability, free cash flow, five-year market performance, leadership, revenue streams, growth, and valuation. The analysis uses Stockcard.io and Twitter’s ticker, TWTR, to work through a quality score and an anti-fragile score.

Q: How does Twitter make money?

Twitter primarily uses an advertising model, with advertising accounting for roughly 90% of revenue in the discussion. It also earns money through licensing and data, giving the company more than one revenue stream.

Q: What new revenue opportunities could strengthen Twitter’s investment case?

Twitter had begun rolling out features designed to help creators monetize their presence on the platform. The presenters believe genuine traction from these features could open new revenue opportunities and change the investment thesis substantially.

Q: Can Twitter target advertising as effectively as Facebook or Google?

The presenters doubt that Twitter can target users in the same way as Facebook or Google. Although Twitter has a large platform and audience, this perceived targeting limitation made its historical advertising model less compelling to them.

Q: How had Twitter stock performed over the previous five years?

Twitter’s stock rose from about $23 to $60 over the five-year period discussed, making it a multibagger for investors who bought when sentiment was poor. The presenters conclude that it outperformed over those five years, although it had underperformed since its IPO.

Q: What growth figures were considered in the Twitter stock analysis?

Revenue in the most recent quarter was up 74%, while growth over the preceding three years was 15%. The current-year revenue growth estimate was 37%, and the presenters suggested a longer-term growth range of roughly 15% to the low 20s.

Q: What makes Twitter different from a traditional social network?

Twitter is described as an open distribution and conversation platform where people primarily connect with strangers rather than friends. The presenters view it as closer to a microblogging platform and say it has been especially effective at connecting professionals in certain industries.

Q: What leadership and valuation factors matter when assessing Twitter stock?

The company was described as founder-led under Jack Dorsey, who returned after Dick Costolo left and was also running Square in a dual-CEO arrangement. Twitter had come public in 2013, was valued at roughly $48 billion to $50 billion during the analysis, and had been extremely overvalued when it first went public.

Summary & Key Takeaways

• Twitter is an open distribution and conversation platform where users can connect with strangers and professionals in various industries.

• The company has multiple revenue streams, including advertising, licensing, and data partnerships.

• Twitter's recent focus on improving user experience, monetization options for creators, and enhancing its advertising capabilities is expected to drive revenue growth.