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Will Twitter (TWTR) Allay Investors' Concerns in Q2 Earnings?
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Twitter, Inc. is set to report second-quarter 2016 results on Jul 26. The company recorded a positive earnings surprise of 46.15% in the last quarter. It has also delivered an average positive earnings surprise of 38.28% over the four trailing quarters. Let’s see how things are shaping up for this announcement.
Factors to Consider
User growth will remain investors’ key area of concern when Twitter reports second quarter results. Investors will also be focussed on the performance of brand advertising. Last quarter, brand advertising revenues (which are the mainstay of Twitter’s revenues) were a dampener.
Twitter’s troubles are far too many. Apart from user growth and slowdown in its once reliable ad business, Twitter remains a “non-profit” establishment. It is yet to rake in profits in more than 10 years of its operations.
To revive its fortunes, Twitter is now going full throttle with “live”. Twitter has always had an edge in this area. It has so far served as a real time platform for breaking news. However, the company is now exploring beyond news and the series of varied live streaming deals are a step in that direction. The company inked streaming deals with CBSN, the streaming news network of CBS to stream both Republican and Democratic conventions. It has also brought on board Bloomberg. Twitter will be live streaming the entire market coverage as well as air several Bloomberg shows.
Twitter also live streamed special Wimbledon coverage, which is important as the company gears up to live stream 10 NFL matches. It won the rights to stream NFL in April. Through NFL, the company hopes to bring more users and at the same time help marketers to reach a younger demographic, mostly millennials, through its Amplify program. Apart from NFL, it has collaborated with NBA as well. It is also in talks with other sports leagues like Major League Soccer and the cable network Turner Broadcasting about acquiring digital streaming rights for sports-related content.
Twitter is also stepping up its AR/VR efforts with the purchase of a machine learning company, Magic Pony. It also brought on board, Alessandro Sabatelli to head its new AR/VR division formed within Twitter Cortex, which is a group of data and research scientists committed to develop machine learning capabilities to improve Twitter products.
Also, Twitter is taking stern measures to curb “trolling” on its platform. Trolling has been a menace for this social media service. A couple of days back, African American actress and the star of the latest Ghostbusters movie, Leslie Jones, was brutally trolled on Twitter. However, Twitter took swift action after Jones’ complaint and banned several users for lifetime. Amid the fracas, Twitter launched a new application process whereby more users can now get a verified account. Verified accounts have a blue badge and enable users to differentiate those accounts with the ones that aren’t authentic.
However, we continue to maintain that Twitter’s ability to attract advertising revenues amid significant competition from the likes of Facebook and Alphabet (GOOGL - Free Report) will be a key factor determining its growth, considering the fact that investment in product development needs to continue.
Earnings Whispers
Our proven model does not conclusively show that Twitter is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Twitter has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 15 cents.
Zacks Rank: Twitter has a Zacks Rank #3 (Hold), which when combined with a 0.00% ESP, makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Here's a stock worth considering that, as per our model, has the right combination of elements to post an earnings beat this quarter:
Amazon.com, Inc. (AMZN - Free Report) with an Earnings ESP of +37.72% and a Zacks Rank #3
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
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Will Twitter (TWTR) Allay Investors' Concerns in Q2 Earnings?
Twitter, Inc. is set to report second-quarter 2016 results on Jul 26. The company recorded a positive earnings surprise of 46.15% in the last quarter. It has also delivered an average positive earnings surprise of 38.28% over the four trailing quarters. Let’s see how things are shaping up for this announcement.
Factors to Consider
User growth will remain investors’ key area of concern when Twitter reports second quarter results. Investors will also be focussed on the performance of brand advertising. Last quarter, brand advertising revenues (which are the mainstay of Twitter’s revenues) were a dampener.
Twitter’s troubles are far too many. Apart from user growth and slowdown in its once reliable ad business, Twitter remains a “non-profit” establishment. It is yet to rake in profits in more than 10 years of its operations.
To revive its fortunes, Twitter is now going full throttle with “live”. Twitter has always had an edge in this area. It has so far served as a real time platform for breaking news. However, the company is now exploring beyond news and the series of varied live streaming deals are a step in that direction. The company inked streaming deals with CBSN, the streaming news network of CBS to stream both Republican and Democratic conventions. It has also brought on board Bloomberg. Twitter will be live streaming the entire market coverage as well as air several Bloomberg shows.
Twitter also live streamed special Wimbledon coverage, which is important as the company gears up to live stream 10 NFL matches. It won the rights to stream NFL in April. Through NFL, the company hopes to bring more users and at the same time help marketers to reach a younger demographic, mostly millennials, through its Amplify program. Apart from NFL, it has collaborated with NBA as well. It is also in talks with other sports leagues like Major League Soccer and the cable network Turner Broadcasting about acquiring digital streaming rights for sports-related content.
Twitter is also stepping up its AR/VR efforts with the purchase of a machine learning company, Magic Pony. It also brought on board, Alessandro Sabatelli to head its new AR/VR division formed within Twitter Cortex, which is a group of data and research scientists committed to develop machine learning capabilities to improve Twitter products.
Also, Twitter is taking stern measures to curb “trolling” on its platform. Trolling has been a menace for this social media service. A couple of days back, African American actress and the star of the latest Ghostbusters movie, Leslie Jones, was brutally trolled on Twitter. However, Twitter took swift action after Jones’ complaint and banned several users for lifetime. Amid the fracas, Twitter launched a new application process whereby more users can now get a verified account. Verified accounts have a blue badge and enable users to differentiate those accounts with the ones that aren’t authentic.
However, we continue to maintain that Twitter’s ability to attract advertising revenues amid significant competition from the likes of Facebook and Alphabet (GOOGL - Free Report) will be a key factor determining its growth, considering the fact that investment in product development needs to continue.
Earnings Whispers
Our proven model does not conclusively show that Twitter is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Twitter has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 15 cents.
Zacks Rank: Twitter has a Zacks Rank #3 (Hold), which when combined with a 0.00% ESP, makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
TWITTER INC Price and EPS Surprise
TWITTER INC Price and EPS Surprise | TWITTER INC Quote
Stock to Consider
Here's a stock worth considering that, as per our model, has the right combination of elements to post an earnings beat this quarter:
Amazon.com, Inc. (AMZN - Free Report) with an Earnings ESP of +37.72% and a Zacks Rank #3
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>