Can Twitter Keep Its Rally Going After Earnings?

Print Email

Twitter Inc. (NYSE: TWTR) is scheduled to release its most recent quarterly results before the markets open on Thursday. Before this, however, investors will have the chance to peek at rival Facebook’s earnings after the markets close Wednesday. Although comparing these two companies is like apples and kiwis, there are some overriding trends in social media that are pervasive. But in the meantime, we’ll take a look at what Twitter has to offer ahead of the report.

The consensus estimates from Thomson Reuters are $0.05 in earnings per share (EPS) and $536.62 million in revenue. The same period of last year reportedly had EPS of $0.13 and revenue of $601.96 million.

Twitter may be the best known failing company in the world. The U.S. president’s presence and the dozens of other celebrities who use the service keep Twitter in the headlines. So do the company’s serial plans to turn itself around. None of these efforts has shown much promise.

However, many investors believed that its most recent earnings announcement showed steps in the right direction. But this is hardly the case, at least if Twitter wants to prove it is on the path to Web 2.0 growth status. The following are highlights of the first-quarter earnings announcement.

The company posted first-quarter revenue of $548 million, down 8% year over year. Quarterly GAAP net loss was $62 million, or −$0.09 per diluted share, with quarterly non-GAAP net income of $82 million, or $0.11 per diluted share. Average monthly active users were 328 million for the quarter, up 6% year over year and compared to 319 million in the previous quarter. Average daily active usage grew 14% year over year, an acceleration from 11% in the fourth quarter, 7% in the third quarter, 5% in the second quarter and 3% in the first quarter of 2016.

But believe it or not, Twitter actually has outperformed the U.S. broad markets in 2017, with the stock up over 20% year to date, despite the bad rap that it gets for not being able to monetize on its platform. However, over the past 52 weeks the stock is only up about 7%.

A few analysts had this to say ahead of the earnings release:

  • Merrill Lynch has an Underperform rating with a $17 price target.
  • Cantor Fitzgerald has a Hold rating with a $16 price target.
  • Wedbush has a Neutral rating with a $16 price target.
  • Canaccord Genuity has a Hold rating with a $15 price target.
  • Wells Fargo has a Market Perform rating.
  • Morgan Stanley has an Underweight rating with a $10 price target.
  • JPMorgan has a Neutral rating with a $15 price target.

In its most recent short interest report, the number of Twitter shares short increased to 60.22 million from the previous level of 57.15 million.

Shares of Twitter were last seen down over 2% at $19.51 on Wednesday afternoon, with a consensus analyst price target of $15.44 and a 52-week range of $14.12 to $25.25.