Twitter: Unique Internet Asset, With Improving Monetization

Elliot Turner of RGA Investment Advisors presented his in-depth investment thesis on Twitter (Nasdaq: TWTR) at Wide-Moat Investing Summit 2020.

Thesis summary:

Twitter is the world’s most important information network. The user side of the network has never been stronger at Twitter, demonstrating accelerating growth for six straight quarters and registering its fastest quarterly growth ever in Q1 2020. These successes are lost amidst the slower evolution of the business side of the network and lackluster efforts to monetize the platform.

For the first time in its history, Twitter management is prioritizing revenue opportunities and has a revamped, engaged board with the experience and knowhow in order to guide the process. From the accelerated user growth and a modest normalization in the advertising environment by 2022, Twitter today could be trading at 8-9x EV/2022 EBITDA, with enhanced monetization offering meaningful upside to earnings from there.

A few resources referenced by Elliot during this session:

• Elliot’s open letter in support of Jack Dorsey, March 2020
• Alex Danco’s article on Twitter’s role in science, February 2020
• AdExchanger article on the ad stack bug that hurt 3Q19 revenue
• Jack Dorsey interview with Rolling Stone, January 2019
• Jack Dorsey interview with Bill Simmons, January 2019

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As background, replay Elliot’s session on Twitter from Wide-Moat Investing Summit 2017. In addition, if you would like to get to know Twitter CEO Jack Dorsey a little better, you may enjoy this interview with him from May 2020.

About the instructor:

Elliot Turner is a co-founder and managing director at RGA Investment Advisors, LLC. RGA Investment Advisors runs a long-term, low turnover, growth at a reasonable price investment strategy seeking out global opportunities. Elliot focuses on discovering and analyzing long-term, high quality investment opportunities and strategic portfolio management. Prior to joining RGA, Elliot managed portfolios at at AustinWeston Asset Management LLC, Chimera Securities and T3 Capital. Elliot holds the Chartered Financial Analyst (CFA) designation as well as a Juris Doctor from Brooklyn Law School.. He also holds a Bachelor of Arts degree from Emory University where he double majored in Political Science and Philosophy.

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