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Bull of the Day: Twitter (TWTR)

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Shares of Twitter (TWTR - Free Report) have plummeted over the last three months as investors worry about potential government regulation and increased turmoil due to its role in the spreading of  “fake news” and misinformation. Yet, the social media company’s top and bottom line growth outlook appears strong amid its streaming video push.

Recent News

Twitter has ramped up its fight against fake news as we approach November’s midterm elections. The company said last week that its new automated detection system continuously monitors for “potentially spammy and automated accounts,” according to a Twitter blog post.

Jack Dorsey’s company said that it “challenged an average of 9.4 million accounts each week” during the first half of September. Twitter also noted that the number of spam-related reports it gets from users has declined on average. “We continue to partner closely with the RNC, DNC, and state election institutions to improve how we handle these issues,” the company wrote.

Overview

The social media firm, along with Facebook (FB - Free Report) and Google (GOOGL - Free Report) , has fought to repair its reputation and clean up its platform from spammy-type posts and accounts. And the company will have to prove to at least some users that it is capable of doing so since Twitter has become invaluable for its instant news capabilities.

Twitter's user totals do appear as though they will be hurt by this move, at least in the short-term. But Twitter's live video content should continue to attract more advertisers in a changing media landscape that favors mobile devices and streaming.

The firm’s total ad engagements skyrocketed 81% last quarter. Plus, Twitter added 50 new video agreements, including more partnerships with Disney’s (DIS - Free Report) ESPN, NBCUniversal (CMCSA - Free Report) , Viacom (VIAB - Free Report) , and others. Twitter also has jumped deeper into live sports and offers weekly live MLS and MLB games.

It is worth noting that Facebook and Amazon (AMZN - Free Report) have also tried to push further into live video as traditional TV fades in the age of Netflix (NFLX - Free Report) and Hulu.

Price Movement

Moving on, let's check out TWTR’s recent performance to help understand where the company stands at the moment. Shares of Twitter have climbed over 65% in the last two years, which outpaces the S&P 500’s roughly 33% jump.

We can see that this run of success has continued over the past 12 months. However, shares of TWTR are down over 30% in the last three months, which could set up a buying opportunity since the firm’s growth prospects appear strong. Investors should also note that Twitter stock popped nearly 3% Tuesday.

 

Outlook

Looking ahead, Twitter’s Q3 revenues are projected to surge by 19.4% to reach $703.72 million, based on our current Zacks Consensus Estimate. Meanwhile, TWTR’s full-year revenues are expected to reach $2.92 billion, which would mark a 19.6% jump.

The other end of the income statement looks more impressive, with Twitter’s adjusted quarterly earnings expected to soar 40% to touch $0.14 per share. Meanwhile, the firm’s adjusted full-year EPS figure is projected to skyrocket roughly 59% to reach $0.70.

Bottom Line

Twitter has seen its fiscal 2018 and 2019 earnings revisions trend upward recently. This positivity helps Twitter stand as a Zacks Rank #1 (Strong Buy) at the moment. TWTR also sports an “A” grade for Growth in our Style Scores system.

Twitter is scheduled to release its Q3 financial results on October 25.

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