Raymond James has reported to have had upgraded Twitter Inc. from ‘market perform’ to ‘outperform’. Price target set by analysts was approx. US$ 25. According to their understanding, Twitter’s risk reward is quite influencing at the moment. And that certainly mean the company is now able to implement its strategies like simplification of how users could view conversation and tweets alongside monetizing efforts – Monetization improvements are expected to be implemented these year, including monetization of logged out users, the integration of DoubleClick and the roll out of new ad formats, all of which could serve as catalysts.
All these factors could enhance social giant’s revenue and growth for future. Moreover, recent insider buying from executives like Twitter Chairman Omid Kordestani seem positive.
“To the extent that user platform initiatives (can drive improved engagement and user growth, we believe this would be a clear catalyst. That said, we believe improvements would likely be 2H16 at the earliest.” – Aaron Kessler
“While high SBC (stock based comp) has concerned investors, SBC has flattened on an absolute basis over the past few quarters and declined as a percent of revenues.”– Ray. J
INSIGHT: SBC is expected to contribute 24% of the net revenues this year and 21% after this year, while declining toward 10% over the longer term.
