Shares of Twitter were set to soar on Wednesday as surprisingly strong user growth eased investor concerns that the popularity of the micro-messaging site was waning.
Twitter's user growth stagnated after it went public to much fanfare in November, leading to a management shake-up that included the exit of chief operating officer Ali Rowghani.
“This quarter's results take away one of the major bear arguments for the stock, namely that the user base is small and maturing,” Janney Capital Markets analysts said in a report.
The company's shares were up 27 percent at $48.95 (R520 ) in premarket trading.
At that price, Twitter is valued at about $29 billion, or about $6 billion more than at Tuesday's close.
Up to Tuesday's close, the company had lost nearly half of its value since its shares hit a record high of $74.73 in December.
The stock went public at $26 per share.
At least four brokerages raised their ratings on the stock, while at least 17 raised price targets, by as much as $18 to a high of $65, after the company reported results on Tuesday.
Twitter's monthly active users rose 24 percent to 271 million in the quarter ended June 30, more than expected, as it introduced product tweaks and services built around the soccer World Cup.
Advertisement revenue more than doubled to $277 million.
Twitter blew past Wall Street expectations in almost every measure in the quarter.
Timeline views, a measure of user engagement, increased 15 percent.
Analysts had expected about 8 percent.
“We continue to believe we are in the early stages of a very long growth cycle for Twitter as it leverages cultural ubiquity, invests in product and technology, and grows the platform,” Goldman Sachs analysts wrote in a note.
Goldman maintained its “buy” rating on the stock and raised its price target to $63 from $52.
Twitter shares closed at $38.59 on the New York Stock Exchange on Tuesday. - Reuters