Microblogging and social networking service company Twitter, Inc. (TWTR) recently announced that it has entered into a definitive agreement to sell its mobile ad unit, MoPub, to marketing software company AppLovin Corporation for $1.05 billion in cash.
Following the news, shares of the company appreciated almost 2% to close at $62.50 in extended trade on Wednesday.
With this sale, Twitter is looking to develop its own products and accelerate growth by focusing on key areas of its service, including performance-based advertising, small and medium-sized business offerings and commerce initiatives.
Notably, MoPub generated revenue of $188 million in 2020.
Also, post the sale, Twitter will assist AppLovin for some time to foster a smooth transition for publishers and advertisers.
The CEO of Twitter, Jack Dorsey, said, “This transaction increases our focus and demonstrates confidence in our revenue product roadmap, accelerating our ability to invest in the core products that position Twitter for long-term growth and best serve the public conversation. We thank the incredible teams and customers who have contributed to making MoPub a success within Twitter over the years.” (See Twitter stock chart on TipRanks)
Recently, Goldman Sachs analyst Eric Sheridan initiated coverage on the stock with a Sell rating. The analyst’s price target of $60 implies downside potential of 2.1% from current levels.
According to the analyst, forecasts for the company are not bright and are broadly below current consensus estimates. Further, the analyst believes that the company will fall short of its own user and revenue goals predicted in its February 2021 analyst day.
Consensus among analysts is a Hold based on 6 Buys, 13 Holds and 4 Sells. The average Twitter price target of $71.38 implies upside potential of 16.5% from current levels.
Twitter scores a 6 out of 10 from TipRanks’ Smart Score rating system, indicating that the stock is likely to perform in line with market expectations. Shares have gained 33.6% over the past year.