Twitter Q4 earnings: What to expect
SAN FRANCISCO — Twitter is scheduled to report fourth-quarter earnings before the market opens on Thursday.
EARNINGS FORECAST: Analysts expect Twitter to report earnings of 12 cents a share, excluding certain expenses, down from 16 cents a share a year ago.
REVENUE FORECAST: Analysts expect Twitter to report revenue of $739.97 million, up from $710.5 million a year ago. By and large, analysts expect Twitter to come in at or above the high end of guidance and consensus.
MONTHLY ACTIVE USERS: Wedbush Securities analyst Michael Pachter expects growth of 1.5% in the U.S. and 0.8% internationally “The service is still too complicated to attract the average Internet user, despite multiple changes,” he wrote in a research note. BTIG analyst Richard Greenfield, on the other hand, expects a Trump bump.
TRUMP BUMP?: So far the tweeter-in-chief has not lifted Twitter’s stock price. Could he lift the company’s fortunes? One Wall Street analyst thinks so. Greenfield upgraded the stock with a $25 price target this week, saying it is “undeniable that Twitter has been thrust into the global zeitgeist” by Trump. Only five other analysts have a buy rating on Twitter. Greenfield says he’s encouraged by the growing number of downloads of the Twitter app on Apple devices in 2017, among other things. “The incessant news flow from the Trump administration playing out on Twitter and the ensuing global reaction pushes Twitter users to be increasingly engaged with the platform,” he wrote in a research note. He also thinks if Trump pumps up user growth and engagement, a takeover of Twitter could be back on the table. Potential bidders such as Salesforce.com and Walt Disney declined to make an offer last year.
LIVE STREAMING: Analysts will be looking for updates on how Twitter’s live video streaming strategy is faring, coming off the presidential debates and NFL games. Periscope CEO Kayvon Beykpour is now in charge of all live video initiatives, according to Recode. “While Twitter’s move into live streaming events is one way the platform can introduce new users to its features, we think that conversion of existing users remains minimal and the service is still too complicated to attract the average Internet user, despite multiple changes,” Pachter says.
ABOUT THAT TURNAROUND: With no takeover interest, the pressure is cranking on CEO Jack Dorsey, who has struggled to reignite revenue growth and user growth since retaking the helm. Social media companies are prized for the fast growth of their audiences and of their advertising businesses, especially on mobile devices. But, since going public three years ago, Twitter has disappointed on both counts. It has struggled to attract new users, especially when stacked against Facebook, with 1.8 billion regular visitors each month and $8.81 billion in fourth-quarter revenue.
Cowen’s John Blackledge expects “mid single digit ad growth amidst a robust digital advertising market.” So analysts are looking for Twitter to deliver profits by cutting costs. In October, Twitter said it would slash 9% of its workforce and shutter its video app Vine. Analysts are concerned that Twitter has become a revolving door for executives. Most recently Twitter’s chiefs of human resources and diversity stepped down.
STOP THAT ABUSE: A top priority for Dorsey has been to stem the growing tide of abuse and harassment on Twitter. In recent weeks, Twitter has begun to roll out fixes such as making it more difficult for those who have been suspended from Twitter to create new accounts.
For years, Twitter billed itself as “the free speech wing of the free speech party.” But as it grew, that hands-off approach contributed to a dramatic rise in abuse, harassment and hate speech. People don’t have to use their real names on Twitter. And with that anonymity has come racist, sexist and anti-Semitic taunts and even full-fledged campaigns from trolls, prompting the temporary departures of high-profile users such as Ghostbusters actress Leslie Jones.
As the company’s user and revenue growth stagnated and public backlash increased, Twitter has in recent months begun to address complaints, particularly after Walt Disney Co. decided not to pursue a bid for Twitter, partly out of concern about bullying on the service.
OH SNAP: Snap’s hotly anticipated initial public offering is drawing renewed attention to just how deeply Twitter has languished since its own splashy Wall Street debut. Twitter’s stock is down more than 70% from its high and its share price, hovering around $18, is way off its $26 IPO price. In fact, Snap is pitching itself to investors as the next Facebook, according to the Wall Street Journal. The last social media company to which Snap wants to be compared is Twitter.