Twitter (NYSE:TWTR) shares have soared more than 55% and counting in the past year. Of course, the iconic platform is best known as a micro-blogging social network. But it’s quickly evolving into something that’s potentially even more influential and lucrative with the rise of cryptocurrencies.
Back in July, Chief Executive Officer Jack Dorsey said that Bitcoin would become a “big part” of Twitter via integration with the company’s products and services. But little known to investors, Twitter has already seen a huge rise in its bottom line due to the influx of cryptocurrency developers. So let’s look at why now’s the time to go all-in on its stock.
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An invaluable role
Unlike with stocks, there isn’t a centralized Securities and Exchange Commission (SEC) database (called EDGAR) where investors can go and get the latest information on financials and updates on important events for cryptocurrencies — until now. Twitter is quickly beginning to play the role of a “decentralized SEC” for the crypto community. Users can follow developer teams on Twitter, thereby getting the newest information on material changes in protocol, new partnerships, and significant events (the equivalent of 8-Ks at the SEC), as well as regular financial reports (10-Qs and 10-Ks). What’s more, individuals can report cryptocurrency tweets deemed to be scams or pump-and-dump schemes — leading to a prototype of self-regulation, a common practice in equity markets.
As a result, the platform is becoming exceedingly popular among altcoin networks such as Ethereum, Avalanche, Solana, Reserve Rights, Chainlink, Monero, and PirateChain, among others. The setup has attracted hundreds of thousands, if not millions, of users wishing to stay up to date with the development of their latest tokens. What’s more, developers can also promote their accounts via advertisement spending, leading to more money in the bag for Twitter. The best part is that the traffic is organic; Twitter doesn’t need to spend money on marketing itself to keep the flow of users from the cryptocurrency syndicate going. Then there are celebrities like Tesla‘s CEO Elon Musk, who repeatedly uses the platform to tout digital currencies such as Dogecoin to his fans, generating substantial viewing activity.
Outstanding financials
During the second quarter of the year, Twitter grew its monetizable daily active user base by 10.8% year over year to 206 million. At the same time, revenue grew by a stunning 74% to $1.19 billion. The company’s earnings have recouped their losses from the pandemic recession — they more than doubled in the quarter ended June 30 — and are on track for stellar growth. Twitter is also doing well in terms of liquidity, with cash and investments outweighing its debt and convertible notes by a factor of two. Overall, it is both a great tech and crypto stock to buy at 10 times revenue. Expect to see sustained profit and share gains as part of the boom in cryptocurrencies.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.