Twitter’s story is no longer about growth — now it’s about value

Here’s a pretty insane stat: Twitter stock is up about 115 percent over the past year. That’s better stock growth than Google, Facebook or Amazon.

What makes that stat all the more insane is that Twitter is largely the same company it was one year ago. Its user base is still not really growing. Its year-over-year revenue is definitely not growing. It hasn’t launched any major new products (remember when everyone freaked out about longer tweets?). And while its biggest issue — user abuse — seems to be improving, it’s certainly not fixed.

That’s not the kind of combination that typically results in a doubling stock price. Why, then, is Twitter stock up? Two words: Profitability and engagement. (There is also the ever-present possibility that someone will acquire Twitter, which also plays into that stock growth.)

Twitter turned a profit for the first time ever in Q4. It made $91 million. It also announced that its daily user base grew by 12 percent, the fifth straight quarter of double-digit growth. (We still don’t know how big Twitter’s daily audience actually is, which makes these growth numbers almost silly to talk about, but let’s put that aside for a moment.)

Those two data points are important because they mean that Twitter, which has suffered from poor user growth for years, finally found the solution for the fact that it isn’t really growing: It’s making money from the users it does have. And those users are coming back more and more frequently, a signal that it will continue making money from its user base moving forward.

That’s all to say that Twitter may have finally transitioned from a company measured by growth to a company measured by value. Don’t invest in Twitter for the massive audience it will one day have. Invest in Twitter because of what it can make from the smaller audience it already has.

That’s a useful narrative if you’re Twitter, because it works right now. It also relies on a number of assumptions, none more important than the belief that Twitter’s Q4 profit was not just a fluke.

What happens when Twitter’s DAU growth slows? What happens if Twitter’s audience starts to shrink, or if advertisers decide it’s no longer a good place to spend their money? Well, those answers might change the narrative entirely.

But for at least one quarter, Twitter found a way to make the value story work in its favor. We’ll see if the company can do it again when it reports Q1 earnings on Wednesday morning.

Analysts are looking for profits of 12 cents per share on revenue of $605 million, according to FactSet. You should also expect little user growth. SunTrust’s Youssef Squali expects Twitter to add just two million new users in Q1.

The company added 12 million new users in all of 2017, growth of less than 4 percent. It has 330 million users.

This article originally appeared on Recode.net.