If you are looking to invest in Twitter (NYSE:TWTR) or already bought into this stock, there might be potential good news in the horizon. As you probably already know, Twitter’s revenues have surprised many analysts and it looks like its advertising revenue potential is far from tapped out. Twitter has taken a page out of Facebook’s playbook and it appears its efforts at plastering as many ads on its users’ newsfeed is resonating well with advertisers. Unfortunately, Twitter’s costs have been quite high and this has weighed down its revenues’ ability to translate into profits.
During Twitter’s most recent Investor Day conference, the company has given guidance regarding how it plans to pare down its costs. If this guidance pans out and Twitter’s revenue streams continue to expand, Twitter might register a profit sooner rather than later. If you think this stock is hot now, wait until it achieves profitability. The major driver for its current stock price appreciation has been its revenue growth. With the right cost cutting programs in place, it has a more than even chance of producing profits.
The bigger question that should occupy investors’ and would be investors’ minds is whether Twitter can do something convincing to continue to grow its user base. Considering the fact that Twitter has a lot of fake users and real users have a high burnout rate, this is the real 800 pound gorilla in the room that plays a tremendous role in the future prospects of this very popular microblogging platform. As I have written earlier, Twitter should explode its revenues by offering business to business Big Data services.