Shares of (TWTR) rose for the first time (up 5.7%) on Monday following news of Jack Dorsey's departure and new CEO Parag Agrawal. Cathie Wood's Ark Invest fund bought 1.1 million shares in Twitter following the management change. Here's what market analysts think.
Investors seem to have finally seen potential for Twitter (TWTR) in the change in management, and the fall in shares as a good opportunity to buy at the IPO price.
Twitter shares fell almost 10% last week after the company announced on Monday 29 November that its founder Jack Dorsey was stepping down as Twitter's CEO and the board unanimously appointed CTO Parag Agrawal as his successor.
Twitter shares were up 5.7% on Monday 6 December, although their price was almost equal to the closing price on the first day of trading on the NYSE on 7 November 2013. Twitter shares have lost nearly 18% since the start of 2021.
At the same time, 2021 has not been an easy year for Twitter's competitors. Snap (SNAP) shares are down 4.3% since the start of the year, while Pinterest (PINS) shares are down as much as 42.6%. Shares in Facebook (FB), recently renamed Meta (MVRS), the largest and best monetised social network, are up 16.4% YTD, but lost almost 17% in the last quarter.
Analyst Truist Youssef Squali believes that Twitter's current state of affairs is "largely due to the mixed results of the past few years".
At the same time, if we compare Twitter's average revenue growth rate of 42% over the last 4 quarters to its competitors, it appears to be close to Facebook's 43% results. Snap and Pinterest's revenues have grown faster on average over the last 4 quarters: 75.5% and 71% respectively.
In any case, Wall Street analysts see the appointment of a new CEO as an opportunity for Twitter's future growth. Hiring an executive with a long history of experience in the company is always better than appointing an outside expert. The CTO, with seven years of experience at Twitter Parag Agrawal may also prove more effective in the role compared to Dorsey, who has been combining the leadership of Twitter since 2015, while also being the head of Square (SQ).
On Friday, the new CEO reorganised Twitter's leadership to improve its consumer, advertising and technology operations.
Elliot Turner, chief investment officer at RGA Investment Advisors, described Twitter as a "strategically important platform" whose stock is now cheap by all objective measures.