If you’re wanting to strengthen your portfolio with some ASX 200 blue chip shares, you may want to look at the two listed below.

Both have recently been named as buys by leading brokers. Here’s why they could be the blue chip shares to buy right now:

Goodman Group (ASX: GMG)

The first ASX 200 blue chip share to look at is Goodman Group. It is a leading global integrated commercial and industrial property company with a portfolio of warehouses, large scale logistics facilities, and business and office parks.

Goldman Sachs is a big fan of the company and recently initiated coverage on its shares with a buy rating and $25.40 price target. This is largely due to strong demand for industrial properties and its burgeoning development pipeline.

Goldman said: “We continue to forecast a ~19% CAGR in AUM over FY21-24e, with AUM reaching ~A$90bn by end FY24. We forecast development completions to contribute the majority (~75%) of AUM growth over 1H22-FY24e (based on development production of ~A$7bn pa).”

ResMed Inc (ASX: RMD)

Another high quality ASX 200 blue chip share for investors to consider is ResMed. It is a global leader in the development, manufacturing, distribution, and marketing of medical devices and cloud-based software applications that diagnose, treat, and manage respiratory disorders.

Analysts at Citi are very positive on the company and have a buy rating and $35.50 price target on its shares. Its analysts believe ResMed is well-placed to permanently grow its market share in the sleep treatment market due to a major competitor product recall.

The broker commented: “Despite the short-term impact [of supply chain issues], we continue to expect ResMed will make a permanent 10% market share gain in devices due to the Philips’ recall.”

The post Experts name 2 excellent blue chip ASX 200 shares to buy appeared first on The Motley Fool Australia.

More reading

• Goldman Sachs rates these ASX shares as buys
• Why the ResMed share price could jump 25% from current levels
• 2 ASX shares to buy if you don’t want to invest in the share market: experts
• Why has the Goodman share price tanked 14% in a month?
• Why I’d buy these 2 ASX 200 shares

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia has recommended ResMed Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The end of the financial year is fast approaching, which means two things: it’s time to start getting your personal taxes in order and ASX shares may see some extra selling pressure.

The S&P/ASX All Ordinaries Index (ASX: XAO) has weathered a 0.8% decline since the beginning of the month. Though, a subset of companies inside the index might receive more punishment this month.

Commonly, investors that are ready to call it quits on an underperforming investment begin to action their sell orders in June as the end of the financial year draws near. As you might imagine, this can momentarily depress the performance of ASX shares.

In particular, companies that have already experienced significant falls in the financial period tend to have a greater chance of landing on the chopping block.

In light of this, here are 10 companies that might be subjected to increased selling this month.

ASX All Ords shares that could be tax time targets

One common market adage is, “sell in May and go away.” Though, this isn’t such a feasible approach for long-term investors. Additionally, the share market isn’t predictable enough to confine it to such simple rules. If it were, we’d all be timing the market perfectly — and, we know that isn’t the reality.

However, it is always helpful to mentally be readied for potential short-term share price weakness. Furthermore, if these are companies shareholders believe are winners over the long-term, any downside this month could serve as a buying opportunity.

Below is a list of ASX All Ords shares that have experienced the greatest falls during the financial year. Based on the above-mentioned logic, these companies could be in the sights of investors looking to make use of capital losses:

ASX-listed company	Share price	Price change in FY22
Sezzle Inc (ASX: SZL)	$0.47	-94.6%
Marley Spoon AG (ASX: MMM)	$0.25	-90.9%
Zip Co Ltd (ASX: ZIP)	$0.68	-90.1%
Booktopia Group Ltd (ASX: BKG)	$0.36	-86.2%
PPK Group Limited (ASX: PPK)	$2.52	-83.3%
Cettire Ltd (ASX: CTT)	$0.48	-81.4%
Tabcorp Holdings Limited (ASX: TAH)	$0.99	-80.9%
Pointsbet Holdings Ltd (ASX: PBH)	$2.52	-78.8%
Magellan Financial Group Ltd (ASX: MFG)	$13.27	-76.4%
Dubber Corp Ltd (ASX: DUB)	$0.70	-76.2%

From the above table, we can see that buy now, pay later (BNPL) companies fell out of favour during this time. ASX All Ords shares such as Sezzle and Zip have both been incinerated, tumbling more than 90% since 1 July 2021.

Meanwhile, other ASX shares that could experience further selling this month include former standouts. Companies like Cettire, Pointsbet, and Dubber were all stellar performers in FY21. Unfortunately, this financial year has seen their respective share prices turn and retreat.

The post 10 ASX All Ords shares that could be stung by tax-loss selling appeared first on The Motley Fool Australia.

More reading

• Here are the 3 most traded ASX 200 shares on Tuesday
• Why Codan, Incitec Pivot, Xero, and Zip shares are dropping
• 3 ASX 200 shares defying today’s sell-off to leap higher
• When will it end? Zip share price plummets again on Tuesday
• Magellan share price lifts amid buyback speculation

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Cettire Limited, Dubber Corporation, Marley Spoon AG, Pointsbet Holdings Ltd, and ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Booktopia Group Limited. The Motley Fool Australia has positions in and has recommended Dubber Corporation. The Motley Fool Australia has recommended Cettire Limited, Marley Spoon AG, and Pointsbet Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Reserve Bank of Australia (RBA) lifted its benchmark interest rate by 0.50% today to temper fast-rising inflation, which in the most recent quarter stands at 5.1%.

The central bank also increased the interest rate on Exchange Settlement balances by 0.50% to 0.75%.

This marks the second consecutive month of rate hikes from the central bank.

In May, the RBA raised the official interest rate for the first time in a decade. The bank boosted the cash rate from the all-time low 0.10% to 0.35%.

With today’s hike factored in, the cash rate now stands at 0.85%.

The S&P/ASX 200 Index (ASX: XJO) fell 0.4% following last month’s announcement.

Today investors are again hitting the sell button, as the rate hike comes in at the high end of analyst forecasts, with most economists having predicted a 0.25% or 0.40% increase. At the time of writing, the ASX 200 is down 1.5% for the day.

Here’s what RBA governor Philip Lowe said about the bank’s latest move.

RBA hikes interest rates to temper overly high inflation

Commenting on the RBA’s decision to lift the interest rate again this month, Lowe said that while inflation in Australia was lower than many other nations are experiencing it had “increased significantly” and is “higher than earlier expected”.

Unexpectedly high energy prices caused inflation figures to surprise on the upside.

Lowe pointed to continuing COVID-19 supply chain disruptions and Russia’s invasion of Ukraine as major factors driving prices higher.

He added that domestic factors were conspiring to drive costs up too “with capacity constraints in some sectors and the tight labour market contributing to the upward pressure on prices. The floods earlier this year have also affected some prices”.

Looking ahead, the RBA believes inflation will increase from the current 5.1% in 2022, but forecasts it will return to its 2% to 3% target range in 2023.

“Today’s increase in interest rates will assist with the return of inflation to target over time,” he said.

Lowe called the Australian economy “resilient”, posting 0.8% growth in the March quarter and increasing 3.3% over the year.

Addressing the strength of the labour market, he said the current 3.9% unemployment rate was the lowest level in 50 years.

Lowe concluded:

Today’s increase in interest rates by the Board is a further step in the withdrawal of the extraordinary monetary support that was put in place to help the Australian economy during the pandemic. The resilience of the economy and the higher inflation mean that this extraordinary support is no longer needed.

What can ASX investors expect next?

Well, a few more hikes look almost certainly to be on the cards.

According to Lowe:

The Board expects to take further steps in the process of normalising monetary conditions in Australia over the months ahead. The size and timing of future interest rate increases will be guided by the incoming data and the Board’s assessment of the outlook for inflation and the labour market. The Board is committed to doing what is necessary to ensure that inflation in Australia returns to target over time.

The post ASX 200 dives on RBA interest rate decision appeared first on The Motley Fool Australia.

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• Core Lithium share price shakes off oversupply concerns to march 8% higher today
• GQG share price slips despite FUM boost

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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ASX tech shares are deep in the red today but the Audinate Group Ltd (ASX: AD8) is a notable exception.

Shares in the audio/video networking group are rallying 2% during lunch time trade to a three-month high of $7.18.

In contrast, the S&P/ASX 200 Index (ASX: XJO) tumbled 1% as other ASX tech names led the loss. The WiseTech Global Ltd (ASX: WTC) share price lost 4%, the Block Inc CDI (ASX: SQ2) surrendered 2% and Altium Limited (ASX: ALU) share price declined 1%.

Audinate share price jumps as ASX tech shares tumble

The threat of an interest rate hike by the Reserve Bank of Australia later this afternoon may be weighing on sentiment. But the Audinate share price is bucking the trend as Morgan Stanley reacted to its trading update yesterday.

The market was a little unsure what to make of the company’s guidance that FY22 revenue would exceed US$30 million as its shares bounced between gains and losses on Monday.

But there’s little doubt in Morgan Stanley’s mind that Audinate is a buy as the broker reiterated its “overweight” call on the shares.

Record quarterly sales

Morgan Stanley noted that at US$30 million, Q4 FY22 sales would have jumped 26% to US$8.7 million. That far exceeds consensus forecast of $7.2 million for the quarter and would mark a new record for Audinate.

The previous quarterly sales peak was Q1 FY 22 when sales increased 14.5% to US$7.6 million.

The broker added:

We noted 3Q22gave confidence that AD8’s revenue had troughed on improving supply and product mix, but we underestimated extent of 4Q rebound. Today’s guidance should also alleviate any investor concerns on demand – industry demand remains elevated, in part driven by a rebound in live [performances and events].

Drivers behind the sales rebound

One of the factors that drove the better-than-expected recovery in Q4 sales is Audinate’s success in aggregating customer demand and lobbying chip manufacturers for supply. This allowed the company to ramp up production of its equipment from March onwards.

Audinate was also making headway in switching customers to its software solutions from its hardware offering. This not only overcomes the global chip supply crunch but will help group margins.

The launch of new products to replace existing hardware is the third factor that contributed to the rebound in sales.

What is the Audinate share price worth?

Further, the company’s strong balance sheet should also help support the shares. It has enough cash for more than four years, according to Morgan Stanley.

The broker’s 12-month price target on the Audinate share price is $10.50 a share.  

The post Why is Audinate outperforming other ASX tech shares today? appeared first on The Motley Fool Australia.

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Motley Fool contributor Brendon Lau has positions in AUDINATEGL FPO and Block, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended AUDINATEGL FPO, Altium, Block, Inc., and WiseTech Global. The Motley Fool Australia has positions in and has recommended AUDINATEGL FPO, Block, Inc., and WiseTech Global. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Whitehaven Coal Ltd (ASX: WHC) share price has become something of a dark horse on the ASX 200 boards over the past year. Whitehaven was long a bit of an ASX laggard. Between mid-2018 and mid-2020, Whitehaven shares fell by around 80%. Ouch. 

But the story has been a very different one lately. Back in September 2020, this coal miner was an 85 cent share. Fast forward to today, and Whitehaven shares are asking $5.40 each. That’s a rise of over 500% in what has been less than two years. Whitehaven shares are also up more than 95% in 2022 alone, as well as by more than 200% over just the past 12 months. 

Rising coal and energy prices have largely been responsible for this dramatic turnaround in fortunes for what is one of the ASX’s largest pure-play coal shares. But now that Whitehaven has catapulted itself back into relevance for the average ASX investor, many might be wondering what the Whitehaven story is when it comes to dividends. Does Whitehaven even pay shareholders to own its shares?

Is Whitehaven Coal an ASX 200 dividend share?

Well, the answer is yes. Whitehaven is an ASX dividend share. However, it has proven to be a patchy one. The company did fund dividend payments every six months over 2018 and 2019. However, it failed to pay a final dividend in 2020 (likely due to the pandemic), and didn’t pay any dividends at all last year. 

Saying that, Whitehaven has turned the taps back on in 2022. Only last month, the coal miner paid out an unfranked interim dividend of 8 cents per share. That was far higher than the 1.5 cents per share interim dividend of 2020, but not even close to the 2019 final dividend of 13 cents per share.

So investors can reasonably expect some income from their Whitehaven shares. but it is certainly nothing close to what the likes of other ASX resources shares like BHP Group Ltd (ASX: BHP) have been paying out in recent years.

At the current Whitehaven share price, this ASX 200 coal miner has a trailing dividend yield of 1.5%.

The post Do Whitehaven Coal shares pay dividends? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Pilbara Minerals Ltd (ASX: PLS) share price sunk to a year-to-date low of $2.19 earlier this month.

A report from Goldman Sachs stating that lithium prices are overvalued has led to negative sentiment across the lithium sector.

In addition, reports that Warren Buffett-backed electric vehicle company BYD is planning to buy six lithium mines in Africa could have weighed on lithium shares recently.

This didn’t help Pilbara Mineral shares, which have now fallen almost 23% in 2022.

Similarly, Liontown Resources Limited (ASX: LTR) and Vulcan Energy Resources Ltd (ASX: VUL) shares have also tumbled this year. They are down 27% and 31%, respectively.

However, despite the news weighing down most lithium stocks, not all companies have backtracked in 2022.

In fact, Core Lithium Ltd (ASX: CXO) shares are up 119% while the Allkem Ltd (ASX: AKE) share price has risen 14%. 

When looking at the broader market, the S&P/ASX 200 Materials Index (ASX: XMJ) is up 7% this year to date, while the S&P/ASX 200 Index (ASX: XJO) has lost almost 4% over the same period.

At the time of writing, Pilbara Minerals shares are swapping hands for $2.45, a gain of 0.8% on the day.

What’s dragging Pilbara shares lower?

There are a couple of additional reasons why the Pilbara share price may have cooled off.

First and foremost, the spot price for lithium carbonate has travelled sideways since its lofty highs in February. This comes after the crucial battery-making ingredient hit a record high of almost 500,000 Chinese yuan (A$104,644) per tonne.

Currently, the lithium carbonate price is fetching 486,500 Chinese yuan (A$101,814) per tonne.

The COVID-19 crisis in China affected demand projections with ‘new energy’ passenger vehicles dropping 40% when compared to March.

Nonetheless, with China’s COVID-19 crisis now under control, electric vehicle manufacturers are expected to return to normal capacity.

Furthermore, a number of brokers have weighed in on the Pilbara Minerals share price in the past month.

Analysts at Barrenjoey initiated an underweight outlook on the lithium miner’s shares but placed an attractive $3 price target.

This implies an upside of roughly 22% from where Pilbara Minerals shares trade today.

The team at Credit Suisse also gave their take, downgrading their view to neutral from outperform.

The broker cut its rating on Pilbara Minerals shares by 19% to $3 per share.

About the Pilbara Minerals share price

Despite its recent slump, the Pilbara Minerals share price has soared more than 80% over the last 12 months.

The company’s shares registered an all-time high of $3.89 earlier this year before treading lower.

Based on today’s price, Pilbara Minerals commands a market capitalisation of roughly $7.29 billion.

The post How is the Pilbara Minerals share price performing against its sector in 2022? appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has positions in Pilbara Minerals Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Core Lithium Ltd (ASX: CXO) share price is up 6.7% in early afternoon trading.

Shares in the ASX lithium explorer closed yesterday at $1.20 and are currently trading for $1.28.

It was only last Wednesday, 1 June, that Core Lithium shares fell 20.8% in a single trading day.

That sell-off came as ASX investors digested a report from Goldman Sachs indicating that the lithium space has seen too much money pour into it too quickly. The influential broker believes that medium term supply will outpace the growth in demand and that lithium prices are due for a sharp correction.

Most every ASX lithium share sold off on the day.

But investors appear to believe the selling action was overdone, possibly influenced by more positive outlooks for the lithium space by other market analysts, including the team at Macquarie.

Bargain hunters helped the Core Lithium rebound 2.7% on Thursday and gain another 7% on Friday. Shares dipped 1.7% yesterday before marching higher again today.

Core Lithium share price snapshot

Long term shareholders have been well rewarded, with the Core Lithium share price up 355% over the past year and up 1,715% over the past five years.

For some context, the All Ordinaries Index (ASX: XAO) is down 2% over the past 12 months and up 29% in five years.

At the current share price, Core Lithium has a market cap of $2.1 billion.

The post Core Lithium share price shakes off oversupply concerns to march 8% higher today appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The GQG Partners Inc (ASX: GQG) share price is backtracking today following the company’s funds under management (FUM) update.

At the time of writing, the global asset management firm’s shares are swapping hands at $1.63, down 0.91%.

For context, the S&P/ASX 200 Index (ASX: XJO) is also in the red, trading at 7,149.1 points, down 0.79%.

GQG delivers FUM update

The GQG share price is edging lower as investors digest the company’s latest FUM report.

In its release, GQG reported that total FUM lifted by US$4.2 billion between 30 April and 31 May.

The biggest rise came from the international equity portfolio which improved by US1.8 billion to US$33.7 billion.

In addition, emerging markets equity jumped by US$1 billion to US$24.7 billion, and global equity swelled by US$0.8 billion to US$29.7 billion.

Lastly, the United States equity division grew by US$0.6 billion to US$6.5 billion.

Across the board, total FUM stood at US$94.6 billion at the end of May.

This is in sharp contrast to when GQG reported a fall of FUM to US$90.4 in the prior month.

GQG share price snapshot

The GQG share price has fallen 26% over the past 12 months. When looking at the year to date, it’s down roughly 7%.

It’s worth noting that the company’s shares reached a 52-week low of $1.123 in early March. This came off the back of GQG’s February FUM update which disappointed investors.

However, GQG shares have since bounced back and are up 12% over the past month.

GQG has a price-to-earnings (P/E) ratio of 11.47 and commands a market capitalisation of around $4.86 billion.

The post GQG share price slips despite FUM boost appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Wiluna Mining Corporation Ltd (ASX: WMC) share price is currently 56.5 cents – the same as it has been for an entire month.

The gold mining company put its stock in the freezer back on 6 May and it hasn’t resurfaced yet.

So, what’s keeping the Wiluna Mining share price on ice? Let’s take a look.

Why is Wiluna Mining still frozen in June?

Fans of Wiluna Mining shares might have had a slow month as the stock remains halted, but hope is on the horizon. Wiluna Mining could return to trade within the next fortnight.

The company is currently working on “recapitalising” after a difficult period of operations.

The recapitalisation project – which appears to have taken the form of a pro-rata entitlement offer – was announced to the market 12 days after the company first entered its ongoing trading halt.

The capital raise is designed to deleverage Wiluna Mining’s balance sheet, improve its working capital position, and de-risk its business.

It came after the company struggled against numerous happenings outside its control, including:

• The COVID-19 pandemic and resulting labour shortages in Western Australia;
• Delays to the sale and monetisation of gold concentrate born from Russia’s invasion of Ukraine; and
• Supply chain issues delaying the commissioning of the WilTails plant.

The challenges saw the company with around $8 million of cash and an anticipated net cash outflow of $24 million (after sales) required to normalise its creditors and receivables.

Thus, Wiluna Mining decided to enter a longer-term trading halt. Doing so allowed it to manage its disclosure obligations while continuing discussions of a recapitalisation with financiers.

Wiluna Mining undergoes capital raise

Now, the company is undergoing an entitlement offer wherein eligible shareholders can subscribe for one new share in the company for every share they already own at a cost of 40 cents per new share.

The offer price represents a 29.2% discount on Winula Mining share price’s last close, a 42.4% discount to its 10-day volume-weighted average, and a 46.3% discount to its 30-day volume-weighted average price.

Participating investors will also receive a new option for every share received. The options will be exercisable at 60 cents and expire at the end of 2024.

The capital raise is expected to line the company’s pockets with an additional $50 million to $84.5 million.

The offer opened on 1 June. It’s expected to close on Friday with the new shares tipped to trade as normal from 20 June.

Though, those looking to trade Wiluna Mining shares might want to hold their excitement for now. The company’s current trading halt appears to cover the entirety of this month.

Wiluna Mining share price snapshot

This year was a tough one for the Wiluna Mining share price prior to its ongoing trading halt.

It tumbled 40.5% between the start of 2022 and 6 May. It’s also currently 33.5% lower than it was this time last year.

The post The Wiluna Mining share price has been frozen for a month. What’s happening? appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

He’s the head of Tesla Inc (NASDAQ: TSLA), the largest electric vehicle maker in the world, but Elon Musk has made headlines recently for a different reason. He’s an avid user of short-form social media platform, Twitter (NYSE: TWTR), and in April he made a blockbuster bid of $54.20 per share to buy the entire company, worth $44 billion. 

But the deal is seemingly falling apart. The broader tech market sell-off has in-part sent Twitter shares plunging to $38 as of this writing, and it has also crushed Tesla stock, which is where most of Musk’s net worth is tied up. And despite having a signed contract, the two parties have been exchanging words after Musk accused Twitter of understating the number of bots and fake accounts on its platform. 

But there might be an even greater challenge ahead of Musk if he successfully closes the deal: Twitter’s financial performance. Based on its recent results, the company is in danger of falling short of its ambitious 2023 targets. Was Musk’s offer to buy Twitter a little too enthusiastic?

The post-lockdown slowdown

In early 2021, Twitter laid out a roadmap for its growth in both revenue and daily monetizable active users (mDAU). At the time, most social media companies were doing extremely well because the pandemic had resulted in lockdowns and an increase in the number of people working from home, which meant more screen time. 

Twitter had just released its 2020 earnings report where it revealed $3.7 billion in full-year revenue and 192 million monetizable daily active users. The company told investors that it would seek to more than double its revenue by the end of 2023, to $7.5 billion, and grow its active user base to 315 million. But more than a year has passed, so how is the plan progressing?

By the end of 2021, Twitter had 214.6 million mDAU, but its year-over-year growth rate had more than halved to 11.8%, from 27% in the prior period. Even if Twitter grew the metric by 19.4% annually in both 2022 and 2023, which is the midpoint of those two figures, it would still fall about 6 million users short of its goal. The problem is the figure came in at 15.9% in the first quarter of 2022 so it’s not even hitting that mark right now. 

On the revenue front, the company has been a little closer to the growth rate it needs. It generated $5 billion during 2021 which was a 37% jump compared to 2020, but that growth rate slowed materially to 22% on an adjusted basis in Q1 2022. And analysts haven’t bought into Twitter’s lofty goals; they anticipate revenue will grow just 15.9% in 2022, and in 2023, they expect the company will fall about $350 million short of its target, hitting $7.15 billion. 

But Musk wants even more

If slowing growth is a problem, Musk doesn’t seem worried at all. According to a report by the New York Times, he thinks he could more than triple Twitter’s projected 2023 revenue by 2028, to over $26 billion, with 931 million users. 

Musk wants to focus on growing the company’s paid subscriber base. It would be a pivot from Twitter’s revenue model right now which is driven by advertising, making up about 88% of money in the door during 2021. 

He has also floated some ideas (on Twitter, ironically) to more carefully verify all real users on the platform so bots are more easily distinguishable, which would make for a better user experience. But this might be countered by the fact that he wants free speech to reign — while it sounds great at face value, it’s hard to determine what that looks like. Less moderation could lead to more abuse, for example. 

Will Musk actually buy Twitter?

Will Musk eventually follow through on acquiring Twitter? He can be a wildcard, to put it mildly, so only he really knows. The spat over the company’s reporting of fake accounts seems to be a sticking point right now. This morning, Musk fired a letter over to Twitter accusing it of failing to provide important data which will help him determine whether the company’s claim that fake accounts represent less than 5% of the user base is, in fact, accurate.

One thing is for certain; Twitter stock trades about 28% lower than his offer price right now, which would translate to a $12.5 billion hit for Musk if the deal closed. That might be tough to swallow, even for the richest guy on Earth, especially since Tesla stock has declined by a whopping 40% this year as well. 

Reversing Twitter’s slowing growth might be Musk’s greatest challenge if he becomes its new owner. And given the difficult market environment for technology stocks right now, he might even find himself better off if the deal fails to go through. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Twitter stock: The 1 huge challenge Elon Musk faces appeared first on The Motley Fool Australia.

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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla and Twitter. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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