Market analysts predict the growth of Twitter shares by at least 23% in 2022
Twitter (TWTR) shares have fallen by 40% over the past half-year and ended 2021 at a low, but in 2022, Wall Street analysts predict the growth of at least 23%, and many target prices for Twitter shares are 56% higher than the current price.
However, given analysts’ estimates for next year, 2022 could bring a significant lift for Twitter shares. From October 19 to the close of trading on December 31, 2021, Twitter shares fell from $66.11 in just two months. A considerable decline – more than 34.6% in a brief period.
The market seems to have been upset by Twitter’s third-quarter earnings report released on October 26. Such a reaction led to a sharp drop in the company’s shares; however, according to some analysts, it was excessive.
A significant part of the stock’s decline was probably because, in the third quarter, Twitter showed negative free cash flow (FCF) in the number of losses of $20.2 million.
However, the good news is that this is unlikely to continue. Firstly, next year Twitter’s investments in the infrastructure of its data centers will be smaller. Secondly, despite the negative dynamics in the third quarter, the company showed positive free cash flow at the end of the year.
In addition, market analysts predict that Twitter’s revenues will grow by almost 22% to $6.19 billion in 2022. s an increase in sales of more than $1.1 billion. They to the forecast of $5.08 billion. For 2021.
Twitter to announce the financial results of the 4th quarter and the entire fiscal year 2021 on February 8. Quarterly revenue and profit statistics on the Twitter reports page.
Given these projections, Twitter has an excellent chance of generating more significant positive free cash flow by the end of next year. As a result, it will help Twitter’s stock grow.
In the first six months of 2021, Twitter generated an adjusted free cash flow margin (FCF) of 8.44%. The company’s sales revenue for nine months.
Assuming that Twitter’s FCF margin grows to 10% by the end of 2022, we can expect to see its total of $619 million. Is the result of an increase in the revenue forecast for 2022 of $6.19 billion, by 10%. Free Cash Flow estimate to forecast the value of Twitter shares.
Using the adjusted FCF yield of 1.5%, Twitter’s market capitalization will be at least $41.3 billion. Can be seen by dividing the adjusted FCF of $619 million by 1.5%. Is 22.9% more than the existing market capitalization of $33.6 billion, as of January 4.
In other words, Twitter shares will be worth at least 23% more than their current price if the company manages to increase its free cash flow margin above 10%.
The average forecasts among 39 Wall Street analysts for Twitter shares in 2022 over the past 90 days are even higher – their average target price is $63.89 per share. Considering the closing price on January 4 at $40.85, this means a growth forecast of 56.4%.
