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TWTR – Market expectations are for Uniform ROA expansion, but management may be concerned about MDAU growth, Spaces conversations, and their ecosystem

September 2, 2021

  • Twitter, Inc. (TWTR:USA) currently trades at recent peaks relative to UAFRS-based (Uniform) earnings, with a 46.1x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may be concerned about MDAU growth, targeted conversations and tweets, and their Twitter ecosystem.
  • Specifically, management may lack confidence in their ability to maintain monetizable daily active usage (MDAU) growth, replace Fleets with a unique format that addresses the same user needs, and drive more conversations in Spaces. Moreover, they may be overstating the potential of their bitcoin adoption to grow their business and the opportunities to grow their United States user base. Furthermore, they may lack confidence in their ability to create a solution to tweet directly to a specific community and enable experiences hosted by individuals or companies through an ecosystem model. Finally, they may have concerns about the financial impact of the slow start to the year, the quality of signals they get from users, and their incremental headcount investments.