With an increasingly stable platform and renewed brand, Twitter (TWTR) is well-positioned to continue to drive user growth, user activity, and advertiser interest. These factors will push Twitter to continue to maintain and expand earnings and give the company a yet-to-be-realized expansion even after its massive return breakout this past year.

I believe Twitter remains at the beginning of its path as a serious mid-stage growth company in a still largely undeveloped niche sector within social media that it's well-positioned to begin to build itself up in.
 

The "Old Twitter" Is Gone

Last year, I covered Twitter extensively as it navigated a series of public regulation concerns, user growth and activity volatility, as well as uncertainty over exactly what kind of platform the company wanted to offer. All of these factors led to the stock volatility in 2018 as hopes in the wake of its surge till then began to seem not as firm.

Indeed, in 2018, even as it reported its first profitable quarter, Twitter faced serious concerns with regard to its long-term trajectory. The platform still struggled to stabilize its brand, rules, and platform function in a way as to give advertisers and users trust in its stability to use and invest in it.

However, that now has changed, as the company has clearly found a stable setting to begin driving growth as it should have long ago and move past its "developmental" stage. Furthermore, we see now that Twitter's profitability was not an exception but the beginning of a new consistent trend, as the company has finally found its footing.

In Q2 2019, the company reported 14% year-on-year monetizable Daily Active Usage growth, the highest since Q3 2017, and strong year-on-year EBITDA and revenue growth. With such strong financials for the quarter, it appears that Twitter's experimental forays into not just tweaking its platform but also reorienting it - in what were potentially beneficial but also risky ways - are paying off.

Heath Terry at Goldman Sachs recently listed Twitter as still having significant potential upside at $52 a share for roughly a 20% gain. I believe it has similar potential to reach a $50+ a share level in the next 12 months, as even at the moment, the company already has made an incredible return rally since the uncertainty surrounding it last year.
 

Twitter Has Major Untapped Growth In Its Social Media Micro-Niche

Twitter's Q2 2019 results show the company still is laying the groundwork for the future and pushing into strategies that seem to potentially work. The company's operating cash flow was its second highest, coming in at $338 million, and the same for investments in property and equipment at $135 million. Sales and marketing expenses and research & development costs are at all-time highs. These bode well for a company that seems to have found out what it is, how to make money, how to attract and keep users, and now, how to continue those trends.

While Twitter's current 13.91 P/E ratio is more a result of the $1 billion+ income tax provision in its Q2 2019 earnings, that doesn't mean the company still doesn't have serious room to continue to rally and grow. It is now at an all-time high of 139 million monetizable monthly active users. However, 139 million - with just 29 million in the United States and 110 million internationally - is just a small drop in the bucket of its potential user base, and thus, revenue stream.

Twitter still has risks in whether it can truly revitalize its brand in a way as to keep on attracting users and advertisers consistently, as well as potential regulatory - both domestic and international - roadblocks to its development. It has the benefit, however, of still being the only real major platform in its specific niche of micro-blogging social media. Now that it has found how to develop that mini-niche, the "just" $32 billion company stands a serious chance of more expansion to come.
 

Conclusion

As described above, Twitter has made a major and dramatic transformation this past year in terms of platform, brand, revenue, and earnings. These developments at the moment seem both sustainable and likely to continue as a trend.

With enormous untapped growth in Twitter's micro-blogging conversational social media niche sector, and its past inability to properly develop or monetize that mini-sector, the company seems now well-positioned to finally expand, grow, and settle in its business model even further.