Social media giant Twitter has taken it on the chin in part because investors are focusing on the wrong things, says one analyst.
Scott Kessler, Head of Technology Research for S&P Capital IQ was on BNN’s “The Street” today to talk about Twitter.
Kessler says his firm upgraded the stock to a “buy” a few weeks ago. He says a lot of people are focusing on the company’s seemingly sluggish user growth, but they should be looking at other metrics. The analyst says other engagement metrics such as “retweets” and “favorites” are seeing double-digit growth.
“I think there is a disconnect in the marketplace, where a lot of people are focusing on the notion of user growth and engagement growth as Twitter kind of indicated that we should last year when they were in the process of coming public,” said Kessler. “It’s just that the metrics they have provided we don’t think are as relevant now as they were, let’s say, six months ago.”
Kessler says part of Twitter’s problem is of its own making because he believes management has done a poor job of communicating the parts of their platform that have “notable and growing appeal for advertisers”. He cites the acquisition of ad serving platform MoPUb, which was completed around the time the company went public, as a pickup that vastly expanded Twitter’s reach in mobile.
Twitter IPO’d on November 6th of last year at $26 a share. The stock closed its first day of trading at $44.90, but has steadily trailed off to current levels just above the thirty dollar mark.
Noting that Twitter trades at about fifteen times his firm’s revenue outlook for 2014, Kessler thinks investors at current prices are getting a bargain. “We think its an attractive value given all the misinformation that’s out there,” he said.