Twitter’s stock rocketed higher on Wednesday amidst renewed Twitter takeover rumors involving speculation that News Corp could have made a bid for the company… or at a minimum, invest in a stake of TWTR.
Over 68 million shares traded Wednesday (vs a daily average of around 20 million) and volume remained high into Thursday. To be sure, none of the Twitter takeover rumors have been substantiated by either party.
Below is an intraday chart of TWTR as the Twitter takeover rumors swirled.
Twitter (TWTR) stock chart from January 20th after news came out…
But that’s not the real news.
While Twitter may be the most hated stock in technology, now may be the time to start seeing the forest for the trees. This could easily be a top performer in 2016 and may be on the verge of massive turnaround sometime in 2016.
Reality Check
Twitter is losing money and hasn’t proven any real ability to grow users beyond its rather steady 324 million monthly average users (MAUs). But, the company’s revenue is exploding higher, growing faster than almost every technology company of similar size… and by rather staggering amounts.
We’re now looking at a company with over $2 billion in revenue, growing 50% year-over-year and a market cap that is currently sitting around $12 billion.
Twitter stock (TWTR) could be in the bottoming process — with just one caveat. If the company reports slipping users (i.e. shrinkage), all bets are off, this stock trades in single digits overnight. But we have no evidence of that right now. What we do have is evidence of monstrous growth and powerful momentum based on a few big news items… none of which involve the Twitter takeover rumors news.
Huge News #1
News broke in December 28th about a meaningful partnership for Twitter in India.
In a bid to enhance its services in India, Twitter recently struck a partnership deal with India-based chat app – Lookup. Users in the country can now tweet on @lookuplite to get information and also make purchases (and book appointments) from a range of retail services. – Source: ZACKS
Yes, we’re talking about payments and transactions, but there’s more. Twitter is also providing free delivery during the holiday season. As of this writing, the new service has been rolled out to Delhi, Bangalore, Mumbai and Pune.
This comes on the heels of a collaboration with Indian communications provider Reliance Mobile. “The entities have together launched #SmartCare on Twitter which will enable users to manage their mobile accounts. In fact, users will have to just tweet to perform everyday tasks like bill payment, recharge, information about best deals and tracking both voice and data usage” (Source: ZACKS).
Why does India Matter?
India represents the third-largest Internet user base after China and the U.S. It’s easily Facebook’s second largest market at 125 million users. Here’s a chart of India’s expected social media growth.
According to Forbes, the number of Internet users in the country is more than 400 million.
Huge News #2
The news that broke on December 10th may even be bigger, as management appears to finally be moving the company in the direction of growth. Here’s what we learned:
Twitter announced Thursday that it will start showing ads to its “logged out” audience, a group of roughly 500 million people who visit Twitter every month but who don’t have active user accounts.
Twitter has long been telling us that the 320 million MAU number is vastly understating its user appeal. And by vastly, I mean, the number looks more like 800 million users. As of December 10th we now know that Twitter is going to start monetizing this base. Here’s the all-time revenue chart, which still looks magnificent and does not include the new strategy.
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