Twitter share price could double in first year: analyst
Brokerage firm rates micro-blogging business as ‘buy’
A brokerage firm has rated Twitter stock as "buy", before it even exists, citing a belief that the company's share price could double within a year of its IPO.
"It is important for investors to look at Twitter beyond just a 140 character text," wrote Robert Peck, an analyst with SunTrust Robinson Humphrey, who predicted a floatation price of $28 to $30 per share. His calculations were based on an initial issue of 50m shares, which he forecast would raise $1.5bn for the company.
Peck characterised the messaging platform business as the leader in the "real-time interest graph", a position which he argued was unique to the nature of the service.
Twitter has been running at a loss for three years, but its advertising revenue has been growing rapidly since the launch of that business arm. In the first half of this year, ad revenue constituted 87% of Twitter's total gross income.
Peck also considered Twitter's acquisition of mobile ad hub MoPub in September, which is widely regarded to fulfil the same function as Google's DoubleClick. He further highlighted the opportunities for revenue growth through Twitter Amplify partnerships, where television networks co-ordinate awareness campaigns through hashtags on TV adverts, which then initiate a barrage of tweets.
Twitter has yet to release information about share price or the number of shares that will be issued. SunTrust Robinson Humphrey is the first brokerage to rate the stock.