What Doesn't Kill Twitter During This Coronavirus Crisis Just Makes It Stronger, Goldman Says

Twitter Inc TWTR peaked in 2014 and has since traded around half that rate. But tides could be turning for the struggling social media stock.

The Twitter Analyst

Goldman Sachs analyst Heath Terry upgraded Twitter to a Buy rating but cut his price target from $39 to $35.

The Twitter Thesis

By Terry’s assessment, the COVID-19 social environment is changing in Twitter’s favor.

“We believe the net impact of advertisers retreating, both as brands weigh the value of spending in a crisis and direct response sees conversions declining, while user growth surges globally as people look to stay informed and connected, has created an attractive entry point for investors,” the analyst wrote in a note.

He expects the platform to prove its value during the coronavirus crisis — as it has in other localized crises — and convert many passive visitors to long-term members. The company will be poised to monetize its user base as its ad technology improves.

See Also: Why Facebook Is More Important Than Ever During COVID-19 Pandemic

Of course, the impending recession and immediate coronavirus impacts weigh on Goldman’s near-term estimates. But the analyst expects Twitter to emerge from the struggle with new strength.

“While there are a number of variables in estimating the impact of the current crisis (user growth, advertiser exposure, ad budget trajectories, etc.), we believe that acceleration in Twitter users implied by company guidance and third-party data, along with the pre-crisis acceleration in user growth and engagement driven by product investments, leave Twitter well positioned to exit this crisis stronger than it entered it,” Terry wrote.

TWTR Price Action

Twitter traded up more than 3.8% on Friday morning, but turned red to trade around $22.85 at time of publication.