This is a step-by-step stock review to answer the question, is Twitter (TWTR) stock a good buy?
This article will teach you how to use the 4Ms of investing. This will be a detailed walkthrough to show you how the 4Ms work and why they are important. If you are interested, you can log into Tykr to use the 4M Confidence Booster (Powered by OpenAI) which will allow you to complete a 4M Analysis in less than 60 seconds.
What are the 4Ms?
- MOS (Margin of Safety) – The MOS is the math part of investing which includes the Summary, Score, and MOS (Margin of Safety).
- Meaning – The meaning is the business model and how scalable the revenue streams are.
- Moat – The moat is how the business compares to other companies in the same Sector and Industry.
- Management – The management is the track record of the CEO.
What 4M score are we going for?
- 80-100 = High confidence – Yay! You should have high confidence buying this stock. It passes all 4M!
- 60-79 = Moderate confidence – Alert! There may be better stocks in the market. Only buy this stock if you truly believe the company will improve!
- 0-59 = Low confidence – Warning! There are better stocks in the market. Due to the low score, you should consider looking at other stocks.
Table of Contents
The following links will direct you to key topics to help answer the question, is Twitter (TWTR) stock a good buy?
1. Twitter Company History
When investing in stocks, it’s important to know the company’s history. This helps us understand the various revenue streams, if they acquired other companies, how they grew through difficult times, and how they separated themselves from the competition.
- Founding: Twitter was founded in March 2006 by Jack Dorsey, Biz Stone, Evan Williams, and Noah Glass, as a microblogging platform.
- Launch: Officially launched in July 2006, allowing users to post short messages, or “tweets,” limited to 140 characters (later expanded to 280).
- Early Growth: Gained popularity rapidly during events like the 2007 South by Southwest (SXSW) festival, where live tweeting became a trend.
- Global Reach: Expanded globally, becoming a key platform for real-time information, news, and social interaction.
- IPO: Went public in November 2013, trading on the New York Stock Exchange under the ticker symbol “TWTR.”
- Hashtags and Trends: Popularized the use of hashtags (#) and trending topics, revolutionizing how people follow and engage with global conversations.
- Acquisitions: Acquired several companies, including Vine (short-form video service) in 2012 and Periscope (live video streaming app) in 2015.
- Challenges: Faced challenges such as user growth stagnation, platform misuse, and the spread of misinformation, leading to changes in policies and leadership.
- Leadership Changes: Jack Dorsey stepped down as CEO in 2021, with Parag Agrawal taking over.
- Elon Musk Acquisition: In October 2022, Elon Musk acquired Twitter, taking the company private and initiating significant changes in policies and operations.
Twitter’s history is marked by innovation, global influence, and constant evolution, making it a central platform for social media and real-time communication.
2. MOS (Margin Of Safety)
When investing in a company, the first step is to look at the financials. Fortunately, Tykr does this for us automatically. The higher the score, the stronger the financials and the safer the investment. The higher the MOS, the higher the potential returns you can make.
- Summary: Overpriced
- Score: 17
- MOS: 1%
To see the most up-to-date Summary, Score, and MOS, please log into Tykr.
3. Meaning
When investing in a company, it’s important to know how a company makes money. A mature business model has multiple streams of revenue which allow the company to weather downturns in the economy.
Here is how Twitter makes money:
- Advertising: Earns revenue by selling ad space, including promoted tweets, accounts, and trends to businesses and brands.
- Data Licensing: Makes money by licensing access to its public data to companies and developers for analytics and research.
- Subscription Services: Generates income through subscription services like Twitter Blue, offering premium features to users.
- Partnerships: Gains revenue from strategic partnerships and collaborations with other companies.
- Sponsored Content: Earns from sponsored content and influencer marketing campaigns on the platform.
Here are a few of the other companies that Twitter has acquired over the years. This is important because a company will use a “Buy before build” philosophy to go to market faster and add additional streams of revenue. A company with more revenue streams has a more stable business model. Keep in mind, that most companies don’t build new software because it takes too long to go to market and generate revenue.
- Vine
- Periscope
- TweetDeck
- Gnip
- Fabula AI
4. Moat
When investing in a company, it’s important to understand how a company ranks against other companies in the same sector and industry. Based on the Score, here is how Twitter stacks up against other companies.
- Alphabet Inc. (GOOG) – 78
- Baidu Inc. (BIDUN) – 33
- Twitter Inc.(TWTR) – 17
To see the most up-to-date Summary, Score, and MOS and each stock, please log into Tykr.
5. Management
When investing in a company, it’s important to understand who the CEO is, what they have accomplished in the past, and how they have helped this company grow. Good leaders typically have stronger cultures, less turnover, and better returns in the stock market.
- Co-Founding Twitter: Jack Dorsey Co-founded Twitter in 2006, revolutionizing how people communicate and share information globally.
- IPO: Led Twitter through its initial public offering (IPO) in 2013, which was one of the most highly anticipated tech IPOs of the decade.
- Product Innovation: Introduced significant features like the retweet, hashtag, and trending topics, shaping how users engage with the platform.
- Growth: Oversaw the growth of Twitter into a major social media platform with hundreds of millions of active users worldwide.
- Acquisitions: Directed the acquisition of key companies such as Vine, Periscope, and TweetDeck, expanding Twitter’s capabilities and services.
- Platform Monetization: Enhanced Twitter’s revenue model through advertising products and sponsored content, increasing the company’s financial performance.
- Leadership: Returned as CEO in 2015, leading efforts to streamline operations, improve user experience, and tackle challenges related to platform abuse and misinformation.
6. 4M Score
All of our homework on this company leads up to the 4M Score. A lot of investors only look at the numbers. Yes, it’s important to look at the first M (MOS) which is the math part of investing but it’s also important to look past the numbers and also look at the Meaning, Moat, and Management. If all 4Ms pass, we should have high confidence in buying this stock.
What 4M score are we going for?
- 80-100 = High confidence – Yay! You should have high confidence buying this stock. It passes all 4M!
- 60-79 = Moderate confidence – Alert! There may be better stocks in the market. Only buy this stock if you truly believe the company will improve!
- 0-59 = Low confidence – Warning! There are better stocks in the market. Due to the low score, you should consider looking at other stocks.
👉 The 4M Score of Twitter (TWTR) is 53/100.
To see the most up-to-date 4M Score, please log into Tykr.
7. Is Twitter (TWTR) stock a good buy?
Some of the top questions investors can have is Twitter (TWTR) stock a good buy or should I buy Twitter (TWTR) stock?
Twitter is a compelling investment due to its high user engagement and large, active user base, making it a powerful platform for advertisers. The company has shown revenue growth through increasing ad revenues and new monetization strategies like subscription services, boosting profitability. As a dominant force in real-time news and trending topics, Twitter drives constant user engagement and remains influential, widely used by celebrities, politicians, and brands. Continuous product innovation, such as Spaces and improved algorithms, keeps the platform relevant and engaging. However, Twitter faces significant competition from other social media giants and has slower user growth compared to its rivals, which may concern investors. Additionally, ongoing challenges in content moderation, such as managing misinformation and harmful content, pose risks. Overall, Twitter’s strong user base and innovative features make it an attractive investment, but potential investors should weigh these benefits against the platform’s competitive and content moderation challenges.
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To truly know if Twitter is a good stock to buy or sell, we recommend you log into Tykr. Within seconds you can see the Summary, Score, MOS, and 4M Score.
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