3 Reasons Twitter Stock Looks Like A Buying Opportunity The social media business continues to see strong advertising revenue growth.

Consider the impact that social media has had on the world over the last decade. What began as small networks that helped people communicate on the internet has transformed into some of the most widely used digital platforms in the world. According to Statista, roughly three-quarters of the U.S. population were social network users in 2020, and that number is only likely to increase in the coming years. As companies that offer social media networks continue to evolve, they are becoming better and better at finding ways to monetize their massive user bases.

Take for example Twitter (NYSE:TWTR), a social media business that continues to see strong advertising revenue growth. This is a social network that has a loyal user base, a unique platform, and a strong brand that could make for a great long-term investment at its current price levels. There are 3 great reasons to consider buying Twitter stock at this time, let's take a deeper look at them below.

Simplicity is Brilliance

One of the most intriguing things about Twitter's platform is that it offers a new and simplified way for people to discover, create, and distribute content. Since each post is limited to 140 characters, the content is direct and easily shared. Each tweet has the possibility of reaching thousands of people, which is very attractive for business owners that want to take advantage of possible advertising opportunities on the platform. Even smaller businesses that operate in a unique niche can find an audience thanks to the social network's large user base and reach.

Related: Twitter Reverts to Standard Retweet Behavior

Twitter is a social network that has real staying power, as many of its users rely on the company's platform to stay informed about news in real-time. Its users range from celebrities and influential politicians to normal people simply looking for a way to stay up-to-date on their interests. The company enables its users to take part in what it refers to as "powerful shared experiences", and its unique and simplistic setup makes Twitter stand out among its competitors.

Continued Earnings Growth

When Twitter released its Q3 earnings report back in October, the stock sold off in a big way. However, the price has recovered since then and is currently trading at levels not seen since 2015. While the company was not able to meet analyst expectations for Q3 monetizable daily active users, there were plenty of bright spots in the Q3 report that confirm Twitter is experiencing continued earnings growth. This is another reason why investors should consider adding shares of the stock at this time, especially if digital advertising spending rebounds sharply next year.

Twitter's Q3 EPS of $0.19 beat analyst expectations significantly and the company reported total revenue growth of $936 million, which was a year-over-year increase of 14%. While the company wasn't able to meet the street's expectations on monetizable daily active users, Twitter still saw mDAUs (monetizable daily active users) grow 29% year-over-year to 187 million. The fact that Twitter was able to increase its EPS by 11.8% year-over-year during a period when advertising revenue is being negatively impacted by the pandemic is a great sign for long-term investors.

Analyst Upgrades Pointing towards Strong Ad Revenue in 2021

Another strong reason to consider adding shares of Twitter at this time is that the company was recently upgraded by JP Morgan from Neutral to Overweight with a $65 price target. The stock was named one of JP Morgan's "top picks for 2021" and is up over 15% in December thus far. This upgrade points to the fact that online advertising has a chance to rebound in a big way throughout 2021, which is a huge growth driver for Twitter.

Online advertising growth was booming until the pandemic hit and forced many companies to cut back their spending to deal with the financial impacts of COVID-19. Now that we have vaccines being distributed and more optimism about getting the pandemic under control next year, there's a chance that online advertising spending comes back in a big way. This is great news for Twitter bulls.

Final Thoughts

If you are interested in adding shares of an undervalued social media company with a lot of upside in 2021, look no further than Twitter. While the company has gone through its fair share of controversies and inconsistent execution from its management, there are still enough positives here to warrant an investment. Look to add shares on market weakness if you are interested in adding Twitter to your portfolio.