RGA Investment Advisors LLC, an investment management firm, published its third-quarter 2021 investor letter – a copy of which can be downloaded here. The fund encouraged existing and prospective clients alike that despite the pains of the past decade, investments in high-quality and reasonably priced equities were well-timed and would be rewarded in the years to come. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
RGA Investment Advisors, in its Q4 2021 investor letter, mentioned Twitter, Inc. (NYSE:TWTR) and discussed its stance on the firm. Founded in 2006, Twitter, Inc. (NYSE:TWTR) is a San Francisco, California-based social network company with a $30.2 billion market capitalization, and is currently spearheaded by its CEO, Parag Agrawal. Twitter, Inc. (NYSE:TWTR) delivered a -12.61% return since the beginning of the year, while its 12-month returns are down by -42.08%. The stock closed at $37.77 per share on March 18, 2022.
Here is what RGA Investment Advisors has to say about Twitter, Inc. (NYSE:TWTR) in its Q4 2021 investor letter:
“Twitter had an eventful quarter. The company started the year seemingly ready to fly for the first time as a public company. Consensus estimates for 2023 revenue started the year at barely north of $5b and by the end of the year were just shy of $7.5b, a target the company offered at their first investor day in years. Unfortunately, it was a second target offered at that same investor day that did them in: 330 million mDAUs by the end of 2023. Typically stocks follow revenues, but mDAUs became the noose around the stock, and perhaps even Jack Dorsey’s tenure as CEO. With each quarter reported following the investor day, the mDAU target became increasingly harder to achieve as the userbase grew below the run-rate required to get there in straight-line fashion. Although the company stated this would happen, investors were left wondering how an already lofty target could be achieved with a higher hurdle. Importantly, however, the revenue target continued to look increasingly achievable with each passing quarter. Taking a step back, people came into the year convinced Twitter had a monetization problem, but exited the year focused on their user base growth.
As always, the Street is incredibly myopic about the company, but we are far more sanguine. The user base will exit the year growing at what we thought was a more appropriate quarterly run-rate (6-7 million quarterly new users), consistent with the acceleration that began before the COVIDinduced bump in Q1-Q2 of 2020. As it stands today, Twitter is trading near its lowest multiples as a public company (on both EV/S at ~4.5x forward and EV/EBITDA at ~18x), at a time when it will report its fastest growth rate as a public company and over the next two years is expected to report two of its next three fastest growing years. Altogether, the years 2021-2023 should be the company’s fastest three-year CAGR period by a lot, meanwhile the last time Twitter traded at multiples this low was in 2017 when revenue actually contracted 3.41% during the year. There is little that can actually justify such a disconnect where the company’s growth is as swift as ever, but its multiple is consistent with negative growth periods. Twitter remains drastically under monetized, has a long runway of opportunity ahead on both the user growth side and monetization, and has optionality in pursuing subscription, data and/or service extensions of the core offering.”
Ellica / Shutterstock.com
Our calculations show that Twitter, Inc. (NYSE:TWTR) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. Twitter, Inc. (NYSE:TWTR) was in 83 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 94 funds in the previous quarter. Twitter, Inc. (NYSE:TWTR) delivered a -12.12% return in the past 3 months.
In March 2022, we published an article that includes Twitter, Inc. (NYSE:TWTR) in the 5 Cheap Stocks Hedge Funds Are Talking About. You can find more than 100 investor letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.
Disclosure: None. This article is originally published at Insider Monkey.
