Tomahawk, WI 07/31/2014 (Basicsmedia) – Twitter Inc. (NYSE:TWTR) recent surge in the market has revived debate, whether the company is ready to compete on the same level against its fiercest rival Facebook Inc. (NASDAQ:FB). Recent rally in the market has been attributed to the company’s 24% growth on active users, which currently stands at $271 million, a shadow of 1.3 billion on Facebook Inc. (NASDAQ:FB). Twitter’s active users increased more than expected in the quarter after the company introduced products tweaks and services.
Twitter Inc. (NYSE:TWTR)’s stock has been up in the market on heavy volumes raising questions whether the ongoing rally will last. S&P Capital IQ Senior equity analyst, Scott Kessler, has initiated a ‘Hold’ rating on the company with a share price target of $54, even though Twitter reported one of the strongest quarters in terms of earnings.
Twitter Inc. (NYSE:TWTR) continues to gain confidence with analysts at Wall Street after shuttering revenue estimates of $283 million to report $312 million in the second quarter.
“I think the biggest kind of headline, take away from the result yesterday is that the expectation was for Twitter to generate about $283 million in Q2 revenues. They delivered $312 Million that was a 10% beat. I think the revenues were much stronger than anticipated, and that gives people confidence about the company’s prospects and business Model,” said Mr. Matt Kessler in an interview on Fox Business.
Twitter has already rebuffed claims that its active user base was extensively’ impacted by the World Cup event, maintaining that engagement played a key role on growth. Kessler remains uncertain as to whether the world cup had an impact on the user growth metrics.
“I think a lot of people going into the Q2 results from the call, were thinking that the world cup probably drove a fair amount of new users and engagement for Twitter over the time that the tournament was taking place. Yesterday Twitter Inc. (NYSE:TWTR) made a point to indicate that new user’s growth really wasn’t favorably impacted by the world cup. It was more related to engagement,” said Mr. Kessler.
Valuation remains the key as to why, Kessler, has a ‘Hold’ rating on the company as it has not achieved the profitable levels that it ought to have achieved in the industry. Mr. Kessler pointed out Twitter Inc. (NYSE:TWTR)’s price-to-sales levels that continue to indicate that the stock should have a $54, share price target.