When he wondered whether or not he should sell some of his stock options before they expire this quarter, Elon Musk, CEO of Tesla Inc., sought an answer from the most powerful communications platform on Earth.

That’s right, Musk polled his more than 60 million followers on Twitter.

After the poll showed a clear 58% to 42% of Musk’s followers favored selling, shares of Tesla fell 5% on November 8.

But while the media was focused on Tesla’s action, they ignored a much larger story.

The fact is, despite its popularity, and despite dramatic episodes like this one, Twitter remains a lousy investment. It’s been dead money all year. By contrast, the S&P 500 is up more than 25%.

That’s why today I want to show you a backend way to gain from Twitter’s huge user base as well as the entire social media sector.

Let me show you why after a 180% run this year, there’s lots more upside ahead…

The Network Effect

Now then, there’s just no question that Twitter is an incredibly important communications tool.

It ranks as the 6th most popular smartphone app and boasts an astounding 353 million users who send out a stunning 200 billion tweets a year.

Not bad for a company that started off in 2006 as an internal company tool to have your SMS text messages sent to small groups of people.

As we know, Twitter exploded in use at the beginning of this decade and casts a wide shadow in the media with journalists, celebrities, and experts constantly sending out tweets or retweets.

But profits based on ad sales were slow to materialize. In fact, Twitter’s first profitable year didn’t come until 2018, 12 years after the service was first created.

Twitter is now an immense cultural mainstay, but the whole social media landscape is much larger than just Twitter and its 211 million monetizable daily active users.

Facebook alone has 2.91 billion monthly active users. But Facebook’s parent company, Meta Platforms Inc., also owns WhatsApp and Instagram. Those two social media networks boast 2 billion and 1.4 billion active users, to boot.

Of course, Mark Zuckerberg’s Meta has become a very controversial investment of late, and the stock’s performance shows that. With negative news in the air, FB slid some 17.5% between September 10 and when it began to rebound on Oct. 27.

What we want here is to capture the upside from firms like Twitter and Facebook with a best-in-class investment that crushes the market.

That’s why I’m glad to introduce you to Sprout Social Inc. (SPT), a company that makes a unified platform for managing social media posts.

The Nerve Center

The Sprout app gives businesses a single interface through which they can coordinate and analyze all their social media posts and pages across many different networks.

In addition, it also integrates marketing, customer service, and sales messaging into the same platform, giving companies a one-stop-shop for getting their message out, measuring their feedback, and keeping their message consistent.

This work is important because social media is a major way for businesses today to communicate with workers, clients, partners, and shareholders. With a whopping 46% of ad spending now going to the digital world, Sprout is also a must-have marketing tool.

But managing all these various posts, feeds, threads, and stories on so many platforms is complex, time-consuming, and frustrating. There’s no easy way to make sure all the posts are keeping to the same themes, or to measure the responses to them.

There’s also no easy way to compare feedback, impressions, or tone across different networks.

Sprout is here to help. The app is built on a single code base, meaning that the app handles each social media network or channel the same way – no strange exceptions or corner cases for specific networks.

This ensures everything works smoothly across all channels, making using it easy and the analytics it creates usable without reservations.

Sprouting Gains

So, it’s no wonder Sprout’s platform has been a huge success. The company boasts more than $204 million in annual revenue from more than 30,000 customers across more than 100 countries.

99% of those revenues are subscriptions, which means they will keep coming in, year after year. Even better, the company’s costs are much lower than its revenues, so Sprout actually achieves a whopping 75% gross profit

With those stats behind the firm, the Sprout stock has really ramped up. Gains add up to 180% so far this year.

But don’t worry, I still see lots of upside ahead.

Over the last three years, earnings-per-share growth has been weak. But in the most recent quarter, they were up 67%, suggesting a big growth spurt.

Even if we put future earnings growth at just one-third that rate, to be conservative, we will still see earnings double again in a little more than 3 years.

With a stock like Sprout in your portfolio, you can have social media really help you build your net worth.

Cheers and good investing,

— Michael A. Robinson

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Source: Strategic Tech Investor