Financial analyst Michael Nathanson has been a Twitter skeptic for several years, keeping a “sell” rating on the social media company’s stock since May 24, 2016.
“By any measure, it has been a terrible call,” Nathanson wrote in an investor report released last week. “The stock has risen by 3X over this time frame.”
Nathanson notes that Twitter’s stock performance has been good during its fourth quarter thanks, in part, to the expected “return of key sports events like the Summer Olympics and the NCAA Men’s Basketball championship.”
Nathanson, though, is not ready to change his sell recommendation. One eye-opening reason is that Twitter is not bringing in nearly as much in ad revenue as its social media competitors.
Nathanson: “From 2016 to 2020, we expect Twitter’s ad revenue will increase by +$876 million or +39%. Over the same period of time, we estimate Facebook’s ad revenue will grow by an astonishing +$56 billion (that’s not a typo) or +208%! Snap’s ad revenue, off a smaller base, is forecasted to increase by over +500% or +$2 billion. Google, the grand-daddy of the bunch, is expected to have aggregate advertising revenue growth of +$64 billion (again, not a typo) or +81% (double Twitter’s growth).”
