Twitter login on an ipad
Source: Pixabay

Should Investors Buy the Dip in Twitter (TWTR) Stock?

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Apr. 30 2021, Updated 1:40 p.m. ET

On April 30, Twitter (TWTR) stock fell over 13 percent after the company posted its first-quarter earnings results. Investors were disappointed because the social networking company missed user growth estimates in the quarter. Twitter also provided lower-than-expected revenue guidance for the second quarter. What’s the forecast for TWTR stock in 2021? Is it a good buy or should investors stay away?

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In the first quarter, Twitter reported an adjusted EPS of $0.16 compared to $0.11 in the first quarter of 2020. The adjusted EPS beat analysts’ average estimate of $0.14. Twitter generated sales of $1.04 billion in the first quarter, which was 28 percent more than it did in the first quarter of 2020. The company beat analysts’ average sales estimate of $1.03 billion.

should i buy twitter twtr stock
Source: Pixabay
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Twitter’s stock news

Twitter’s earnings report shows that it added 7 million monetizable daily active users in the first quarter. The company’s daily user number increased to 199 million, which is below the consensus estimate of 200 million. The user base rose by 20 percent YoY. Twitter’s advertising revenue grew 32 percent YoY to $899 million in the first quarter. The company generates most of its revenue from selling online ads.

For the second quarter, Twitter expects sales growth in the range of $980 million–$1.08 billion compared to analysts’ expectation of $1.06 billion.

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What happened to Twitter stock?

Twitter stock tumbled 13 percent after the social networking company reported its first-quarter earnings results. The stock has gained 4.5 percent YTD and 103.3 percent over the last year.

should i buy twitter twtr stock
Source: Koyfin

TWTR Stock Price

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Twitter’s stock forecast

According to Market Beat, analysts' average target price is $68.13 for Twitter stock, which is 5 percent above its current price. Among the 36 analysts tracking Twitter, 16 recommend a buy, 19 recommend a hold, and one recommends a sell. Their highest target price of $112 is 72 percent above the stock's current price, while their lowest target price of $23 is 65 percent below.

Several analysts reduced their target prices on Twitter stock after the company reported its first-quarter earnings results. J.P. Morgan reduced its target price from $91 to $80, while Morgan Stanley reduced its target price from $68 to $62. Barclays, KeyCorp, UBS, Mizuho also reduced their target prices.

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Twitter stock looks like a good investment.

Twitter stock looks like a good investment considering the company’s solid financial performance and healthy user engagement. The company will continue to benefit from the growing appeal of Twitter’s platform as a global social networking service.

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Twitter trades at an NTM EV-to-sales multiple of 9.6x, which looks attractively priced compared to other technology stocks. Pinterest (PINS) and Snap (SNAP) are trading at NTM EV-to-sales multiples of 15.2x and 22.2x, respectively.

Best price to buy Twitter stock

Although Twitter stock has gained 4 percent this year, it still trades at nearly a 30 percent discount to its 52-week peak of $80.75. Going by the consensus price forecast, TWTR stock sports a minimal upside potential. It looks best to buy under $50.

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