I am assigning Twitter (NYSE:TWTR) a neutral risk/reward rating based on its symmetrical expected return profile over the near term. This is a result of the competing forces of an elevated valuation and the significant untapped growth potential across a wide spectrum of non-advertising revenue streams.

Risk/Reward Rating: Neutral

Twitter is a unique platform and is arguably the most dynamic platform available for a large spectrum of social interactions. As a result, there is incredible long-term upside potential for the stock. That said, the company has yet to demonstrate an ability to leverage the Twitter platform for non-advertising revenue growth.

Advertising represents 89% of total sales and is trending higher. The growth rate of non-advertising revenue has stagnated near 10% in recent years. Jack Dorsey’s replacement is an 11-year veteran of Twitter and the previous Chief Technology Officer. There is little indication that the leadership shift will serve as a catalyst for a material change to Twitter’s historic growth trajectory. The existing growth trajectory is therefore of critical importance for the Twitter investment case.

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