Twitter Inc. (TWTR) up to a 6-year high in the first hour of Wednesday’s U.S. session, following a major JPMorgan update. The stock has been on a roll so far in 2020, now posting an impressive 72% yield so far. Nevertheless, the social media giant still trades 20 points below the December 2013 high of 74.73, highlighting years of sub-par performance compared to rival Facebook Inc.. (FB) and other industry players.
Trade at a discount to competitors
The stock is trading at a huge discount on Snap Inc. (SNAP) and Pinterest Inc. (PINS), with both cases moving to highs this year. However, a new advertising platform, ongoing operator pressure, and a management buyback plan are developing a mixed feeling, raising odds the company will earn up to 30 times 2022 EBITDA (earnings before interest, taxes, discounts and depreciation) and 9.5 projected 2022 hours of revenue.
JPMorgan analyst Doug Anmuth upgraded the stock to ‘Overweight’ on Wednesday, raising the price target to $ 65 while saying, “we are bullish on online advertising in 2021 and expect it to grow business growth again. We believe Twitter will show the biggest rebound as the worsening ad decline is driven by a pandemic, coupled with company-wide revenue prioritization, early benefits from ad tech rebuild through the new Ad server and Map 2.0 distribution, and an increase in both advertiser and ad loading ”.
Wall Street has been playing catch-up all year, with Twitter performing better than expected. Consensus stands at a mixed ‘Hold’ level based on 7 ‘Buy’ and 19 ‘Hold’ recommendations. One analyst is now suggesting that shareholders close positions and move to the sidelines. Price targets are currently ranging from a low of just $ 36 to a high of $ 65 while the stock opened Wednesday’s $ 8 session above the median target of $ 47.
Wall Street and Technical Preview
A 7-week rally has now resisted at the .618 Fibonacci level of the 2013 to 2016 decline at 51, opening the door to an uptrend that should reach the .786 at 62. The price level that narrow with many whips. which followed the 2014 reversal, marking the last major hurdle before Twitter arrived and testing the highs in the 70s. While all the systems are ‘gone’, a trip into that peak could easily take another 6 to 12 months.
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Disclosure: the author had no positions in previously mentioned securities at the time of publication.