Stock of the Week: Twitter

Twitter was Donald Trump's go-to medium, but will the social media platform continue to bring in users and advertisers?

James Gard 6 August, 2021 | 11:16AM
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Social media has been our theme for our stock of the week poll. Our Twitter followers have, naturally, chosen Twitter over Facebook/Instagram (FB). At $50 billion in market cap, Twitter (TWTR) is a minnow in comparison with Facebook, which is worth over $1 trillion, but has outsized influence on the global social and political debate. Trump was the first US President to use Twitter to announce policies to his millions of followers, although his account was eventually suspended. More than 200 million people use the social media network every day, including A-list celebrities and high-profile sporting figures, which naturally draws in advertisers. Beyond the trolling, Bitcoin fanatics and retweets, is Twitter a good investment?

Twitter has always been an outlier in the US technology boom and was never seen by investors as part of the original group of FAANGs (Facebook, Amazon, Apple, Netflix and Google), which have gone from strength to strength in the last decade. Twitter had an amazing first day as a public company, with shares surging by more than 70%, and the share price is up 165% since the IPO price of $26 per share. In the context of America’s great tech boom, this isn’t that impressive: Facebook struggled after its IPO but has multiplied investors’ money by 10 times over a similar period.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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James Gard  is content editor for Morningstar.co.uk