Twitter in 2022
Twitter shares (TWTR) have fallen 40% in the last half year and ended 2021 at a low, but in 2022 Wall Street analysts predict a rise of at least 23% and many target Twitter stock prices 56% above the current price.
For Twitter shares (TWTR), 2021, unlike 2020, was not a successful year the price lost 20% and continued to pull back to a low in the early days of 2022. Tuesday's trading ended with Twitter shares falling 4.24% to $40.85. However, given analysts' estimates for next year, 2022 could bring a major lift for Twitter shares.
From 19 October to the close of trading on 31 December 2021, Twitter shares fell from $66.11 in just two months. That's a huge drop more than 34.6% in a very short period. The market seemed to be upset by Twitter's third-quarter earnings report, released on 26 October. This reaction led to a sharp fall in the company's shares, but some analysts believe it was excessive. Much of the fall in shares was probably due to the fact that Twitter posted a negative free cash flow (FCF) loss of $20.2m in the third quarter.
However, the good news is that this is unlikely to continue. Firstly, Twitter's investment in its data centre infrastructure will be smaller next year. Secondly, despite the negative performance in the third quarter, the company reported positive free cash flow for the year.
In addition, market analysts forecast that Twitter's revenues will grow by almost 22% to $6.19 billion in 2022, an increase of more than $1.1 billion compared to the forecast of $5.08 billion for 2021. Twitter is expected to report Q4 and full fiscal 2021 financial results on 8 February. Quarterly revenue and profit statistics are on Twitter's reports page.
Given these projections, Twitter has a very good chance of generating more positive free cash flow by the end of next year. This would help Twitter shares to rise.
Shares in 2022
For the first nine months of 2021, Twitter produced an adjusted free cash flow (FCF) margin of 8.44%. This is based on FCF of $296m on the company's $3.51bn in sales revenue for the first nine months.
It is noted that Twitter shares would be worth at least 23% more than their current price if the company manages to increase its free cash flow margin above 10%.
Average forecasts among 39 Wall Street analysts for Twitter shares in 2022 over the past 90 days are even higher, with an average target price of $63.89 per share.
