While Facebook is the undisputed social media leader for now, many analysts that cover the sector have started to notice a change. While many older Americans are using Facebook, much of younger America is getting news, information, commentary and more from Twitter. The millennial demographic from 18 to 29 is one of the most sought after by advertisers, and Twitter is a place they may target big time. We highlighted the staggering number of teens online constantly.
In a new research note, the analysts at Jefferies not only start coverage on shares of Twitter Inc. (NYSE: TWTR) with a Buy rating and a $65 price target, they list eight big reasons why the tech stock in an outstanding buy even at current levels. They cite online video and mobile use tailwinds as two of the compelling factors for the initiation. Twitter closed trading on Thursday at $52.17.
Here are the eight reasons Jefferies has for buying Twitter now:
- Online video ads are estimated to be a $17 billion opportunity by 2017. Twitter’s launch of Periscope helps it stand apart in this space.
- The growth in the online advertising market is increasingly levered to mobile. Some 88% of Twitters ads are mobile.
- Social commerce is growing an incredible three times faster than e-commerce.
- Twitter is increasing the advertising load. In the third quarter 2014 it was 1.3%, and management is targeting 5%.
- Twitter is a great match with TV as 66% of mobile users tweet while watching TV, often sports. Some 70% of the tweets are about what is live on TV.
- The Twitter user experience is improving fast. In fact, user trends started to turn around for the company in January.
- The company’s operating leverage is improving as it continues to roll out new advertising products.
- International is starting to monetize in a more positive way. The report cites the fact that while international accounts for 77% of the user base, it only produces 34% of the total revenue. Clearly raising that would add to the top and bottom line.
Even though Twitter had a highly anticipated initial public offering (IPO), it struggled out of the gate and the bears smelling blood pounced. The turnaround over the past year has been dramatic, and the bulls may be poised to get the last laugh.
ALSO READ: Who Would, or Even Could, Acquire Twitter?
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