From an outsider’s perspective, things have been pretty tough at Twitter lately.
The company was slammed after its latest quarterly earnings report revealed stagnating user growth, and chief operating officer Ali Rowghani recently left after CEO Dick Costolo took more control over the product.
But SunTrust Robinson Humphrey analyst Robert Peck currently has the stock listed as a buy, primarily due to what he sees as Twitter’s “unappreciated asset”: the mobile advertising exchange MoPub.
MoPub works by selling ad space on mobile apps via an automated auction, allowing app publishers to sell to the highest bidder and advertisers to reach users across a range of different apps, including WordPress, Songza, and OpenTable. Since MoPub ads reach more than 1 billion mobile devices each month, Peck says the ad exchange’s scale is rivaled only by services run by Google, Facebook, and Apple.
In a note published Tuesday, Peck writes that MoPub, which Twitter acquired in September for $US350 million, will bring in more than $US500 million in annual revenue by 2017, up from an estimated $US56 million for 2014.
Peck is bullish on MoPub’s growth because people are increasingly ditching their computers and laptops for mobile devices (80% of Twitter usage is now on mobile devices), and because advertisers are becoming more comfortable purchasing mobile ads via the real-time bidding auctions that MoPub provides.
The analyst note says that MoPub’s exchange is additionally powerful because it can help advertisers target users by integrating Twitter’s user data, which allows advertisers to reach prospective customers based on their locations and interests as expressed on the social media platform.
As a result, SunTrust has Twitter’s price target at $US45, above its current price of ~$38.
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