Did you hear what Twitter (TWTR) said at the Citi Tech Conference yesterday? Oh my, I enjoyed that. The key is, my take, they think mDAU (Monetizable Daily Active Usage) growth can continue to accelerate. If so, this stock has much higher to go. New multi-year highs on the way.
 

Wow! mDAU Comments At The Citi Tech Conference Yesterday

The most important stat that investors care about with Twitter is mDAU growth rates. The growth rate peaked about two years ago and started re-accelerating the last couple of quarters.

This is so key for several reasons. For one, it gives investors visibility that there's upside to revenues as long as there's usage growth. And if that growth is accelerating, even more visibility. That drives valuations.

For advertisers, they want to advertise where consumers are. Not only is the usage base growing but Twitter has found ways to help advertisers find better ROI on their investment. That drives revenues.

More users, more ads, more revenues, more earnings, better valuation.

Now, listen to what the CFO said at Citi yesterday to get investors excited. Oh so sweet,

"Kevin Crissey

So you've seen improving mDAU growth over the past couple of quarters. How are you able to drive accelerating user growth?

Ned Segal

While, when you think about the improvements that we make to the service, they compound over time. So, the work that we did a year ago to make it so that you can follow a whole timeline around an event whether it’s the World Cup or a congressional election, benefits to people who come to Twitter today as well as all the work that we did last quarter. And so, when the improvements continue to compound, they're intended to drive DAU growth over long periods of time, not just in the period in which we deliver the improvement. We're proud of that 9% going to 11%, going to 14% over the last couple of quarters but we have a lot more work to do to get the rest of the world to use Twitter as well."

When the CFO says DAU is accelerating because "improvements" "compound over time", he implies that things should continue to improve, compound, and accelerate. Oh, so sweet.

And later when he says "We're proud of that 9% going to 11%, going to 14% over the last couple of quarters but we have a lot more work to do to get the rest of the world to use Twitter as well", he means that, while DAU growth has been accelerating, they have even more opportunity to continue to accelerate into the future.

Music to my ears.

If you've read my stuff in the past, you know I love accelerating stories. Tech investors love accelerating stories.

But what I loved most is that he said it twice.

Watch this.

Here he goes again, same thing, same great topic, DAU growth accelerating. He says it again. And again, he hints that it can continue.

"We feel like we're moving faster than we used to. We feel like the DAU growth that we talked about at the beginning 9% going to 11% going to 14% is a great way to demonstrate some of the progress that we're making, but we know there's so much more work in front of us to deliver for all those people who are coming to Twitter every day."

Where do they want to be judged? "A great way to demonstrate the progress" is "9% going to 11% going to 14%." How should they be judged? Accelerating DAU growth. Oh so nice.

People want to be judged on what they think they can do. I think that he thinks they can continue to accelerate that DAU growth.

And Investors Noticed

We run a model portfolio; Twitter had been our largest position for a little while and going into this conference.

Here's us touting it in December and in a podcast in March ahead of this 50% move. We've liked it for a while.

The largest of investors all came back from a snoozy summer to figure out what to invest in for Q3. So, they all showed up at Citi. The Citi analysts did a good job to keep pointing out the rooms were packed the last two days at the conference.

Companies typically meet one-on-one with the largest most interested investors that pay big money for these meetings.

You can tell if they liked a company or not at these conference meetings.

How can you know? Look here.

Twitter spoke on Wednesday. You can bet that investors liked what they heard on Wednesday, bought on Wednesday and kept buying on Thursday. Look at that action. Straight line higher straight into the close. You think they liked what they heard?

They certainly heard what we heard.

And if conference stock action is any guide, the largest investors liked what they heard.
 

New Highs Coming?

If Twitter hits above $48, it will hit territory not seen since 2015. A little higher hits new highs not seen in about five years.

Breakouts coming.

Can it do it? On accelerating DAU growth it can.

Will it have the push? Well, you have strong reason to believe the biggest money managers with the capital to push it higher just liked what they heard.

They like accelerating stories and the CFOs are pretty happy to talk about it, twice.

Money Flowing From Alphabet And Facebook?

Here's another source of capital driving Twitter.

Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL) is supposed to have some anti-trust concerns next week. Facebook (NASDAQ:FB) will have persistent privacy concerns. It makes these great stories less clear.

But the space is an amazing high margin segment that investors want to put money to work.

And Twitter doesn't have anti-trust or major privacy issues. So, with accelerating data points, large investors should have no problem shifting some of that Google and Facebook money into Twitter stock. That can help it go higher, right?

Conclusion

We've loved Twitter for a while. The numbers keep getting better. I think there's enough money that can flow into Twitter to keep it going. And with the CFO excited about mDAU growth, that should be music to any investor's ears.