Twitter Inc: Why This Analyst Sees 134% Upside in Twitter Stock

Twitter incAnalyst: Twitter Stock Could Hit $39

Twitter Inc (NYSE:TWTR) is starting its renewal from the board down. Twitter stock is still trading flat, below $17.00, but the company hopes that fresh blood on its board of directors can help improve its fortunes. Last week, it appointed two new members.

One was Martha Lane Fox, co-founder of, and Hugh Johnston, CFO of PepsiCo. They have replaced Peter Currie and Peter Chernine, both of whom have declined running for re-election at the next shareholders’ meeting in May. CEO Jack Dorsey believes he can boost the market’s confidence in Twitter stock by bringing more fresh faces to the board.

Specifically, Hollywood faces, or at least media types, who have some weight in Tinsel Town. The New York Post hinted as much, noting that Twitter has offered Rain Man producer Peter Guber and TV creator Shonda Rhimes, of Grey’s Anatomy fame among other shows, board seats. (Source: “Twitter wanted to add Shonda Rhimes to their board,” New York Post, April 10, 2016.) Twitter said it wants more media and entertainment world personalities to add diversity to the board.

Reverend Jesse Jackson was one of those who criticized Twitter, and Silicon Valley in general, for lacking diversity last year. (Source: “Criticized, Twitter picks Jeffrey Siminoff as the new chief of diversity,” The Financial Post, December 31, 2015.) The company is now making efforts to change and it sees Hollywood as fertile ground. After all, Hollywood stars are among the most visible users of Twitter, as the recent feud between actors Susan Sarandon and Barbra Streisand, over Hillary Clinton, has demonstrated. (Source: “Streisand vs. Sarandon on Twitter: Hollywood Superstar Liberal Divas Take Sides in Hillary vs. Bernie,” Showbiz411, March 28, 2016.)

Hollywood supplies much evidence to suggest that Twitter is a special product. As such, it does not have any direct competition anywhere around the world. (Source: “Twitter (TWTR) Stock Price Target Raised at Pivotal,” The Street, April 11, 2016.) In terms of monetization, Twitter’s unique offering, further ensured by CEO Jack Dorsey containing the “tweets” to a limit of 140 characters, gives advertisers a unique platform.

The research investment firm Pivotal says that Twitter can keep growing at a faster pace than the rise in global digital advertising. (Source: Ibid.) Indeed, on Monday, Pivotal raised TWTR stock’s target value from $32.00 to $39.00. That’s more than double its current value.

“Twitter can develop ad products that allow marketers to spend money on the platform, the company can continue to grow above the pace at which global digital advertising is expanding,” Pivotal wrote in a note. (Source: Ibid.)

Pivotal has something to hinge its Twitter optimism. Twitter has attracted more advertisers to the site; it added some 48% more advertisers, which in dollar terms amounted to $641 million year-over-year. (Source: “Twitter’s Ad Revenues Surge despite Flat User Growth,” Market Realist, February 12, 2016.)

Another one of Twitter’s main strategies to achieve greater user numbers and advertising is to leverage the popularity of the National Football League (NFL). Twitter will use the NFL broadcasts as part of a broader plan to highlight its ability to offer high-quality live video content. (Source: “Can The NFL Deal Improve User Engagement On Twitter?Forbes, April 11, 2016.)

In other words, Twitter will aim to draw more users to its platform through such popular content as NFL football and live content. This could work in the short term. Indeed, if Twitter can pull it off, it could boost the number of users and their level of engagement, becoming the catalyst for the kind of bullish performance that TWTR stock analysts expect.