Shares of Twitter are surging to a seven-year high Wednesday after the social media giant reported fourth-quarter earnings Tuesday after the close that blew past analyst expectations, tempering concerns on Wall Street that the firm’s recently booming growth may “implode” as a result of the platform’s decision to ban former President Donald Trump.
As of 11:15 a.m. Eastern, shares of Twitter were surging nearly 9% on Wednesday, tacking on to highs reached in early February and boosting the firm’s market cap to $51.5 billion–a level unseen since the firm’s early days as a public company in January 2014.
In a note to clients Wednesday morning, Pivotal Research analyst Michael Levine boosted his price target on Twitter shares to $77.25, giving the stock about 25% upside to current levels as a result of “meaningful acceleration” in advertising revenues of $1.2 billion last quarter–nearly 12% more than analysts expected.
The firm’s total revenue of roughly $1.3 billion also eclipsed analyst expectations, climbing about 30% year over year and coming in 10% above average analyst expectations; earnings per share of 38 cents were nearly 25% higher than the average forecast.
A slew of other analysts, hailing from firms including MKM Partners, JP Morgan, and KeyBanc reiterated their buy or overweight ratings on the Twitter stock Wednesday, but the firm’s average price target of $50 (from 36 analysts issuing such guidance) is still about 30% shy of current prices hovering around $65.
Piper Sandler analyst Thomas Champion, whose price target is in line with current levels, said the U.S. election helped the firm grow its fourth-quarter user base, which increased by 27% year over year to 192 million daily active users, 5 million more than the prior quarter.
TANGENT
In a Wednesday morning appearance on CNBC, Twitter CFO Ned Segal said former President Trump would never be allowed back on the platform even if he runs for president again in 2024. Twitter banned Trump from its platform and removed all of his tweets on January 8, two days after rioters stormed the Capitol while lawmakers worked to certify President Joe Biden’s election victory. The firm cited the “risk of further incitement of violence” as the reason behind the ban, but that didn’t stop public figures and even some European government officials from criticizing the move for purportedly threatening “freedom of opinion.”
CRUCIAL QUOTE
“Both on the earnings call and analyst call back, we felt that management-led with a swagger and confidence we have not seen in some time,” Levine said Wednesday. “[One of] the biggest bear cases we have heard for months on Twitter has been that user growth is going to implode post-Trump” and once the firm starts cycling through the shelter-in-place restrictions that initially boosted user growth in the second and third quarters, but Levine notes those things are “clearly not happening based on current visibility.”
BIG NUMBER
$14 billion. That’s how much Twitter cofounder and CEO Jack Dorsey is worth, according to Forbes. Though the bulk of his fortune is now tied up in shares of fintech Square, which he also cofounded, his net worth still jumped by nearly $100 million as a result of the Wednesday Twitter rally.
SURPRISING FACT
Twitter shares are up nearly 80% over the past year.
