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Twitter (TWTR) to Report Q2 Earnings: What's in the Cards?

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Twitter is set to report second-quarter 2022 results on Jul 22.

The Zacks Consensus Estimate for revenues stands at $1.33 billion, indicating growth of 11.8% from the year-ago quarter reported figure.

The consensus mark for second-quarter earnings moved up by 14.3% to 16 cents per share in the past 30 days, indicating a decline of 20% from the year-ago quarter’s levels.

The company’s earnings beat the Zacks Consensus Estimate in three of the last four quarters and missed the same in one. TWTR has a trailing four-quarter negative earnings surprise of 479.5%, on average.

Factors to Consider

Twitter’s ad revenues are expected to have remained steady in the second quarter, driven by the improved demand for Twitter’s solutions, fueled by the resumption of more events and product launches. However, persistent concerns over inflation/recession and supply-chain issues have caused a downswing in advertiser sentiment for digital ads that might impact ad revenue growth in the soon-to-be-reported quarter.

The Zacks Consensus Estimate for second-quarter advertising revenues is pegged at $1.23 billion, indicating growth of 17.3% from the year-ago quarter’s reported figure.

The company’s initiatives to add features and focus on tackling abuse issues are expected to have helped it expand its monetized user base in the to-be-reported quarter.
 
In first-quarter 2022, average monetizable daily active users (mDAU) rose 15.9% year over year and 5.5% sequentially to 229 million, driven by progress across Twitter’s consumer and revenue products portfolio.

The company continues to remove accounts and fake pages to make the platform more secure and improve the quality of conversation.

The Zacks Consensus Estimate for second-quarter mDAU is pegged at $236 million, indicating growth of 14.6% from the year-ago quarter’s reported figure.

Steady demand for video ad products like Video Website Cards and in-stream pre-roll is likely to have contributed to the top line.

However, rising expenses due to increased investments are expected to have put pressure on profit margins.

Post-Quarter Development

Twitter has been in the spotlight since Elon Musk announced his plans to buy the social media platform. In April, Twitter announced that Elon Musk bought a 9.2% stake in the company, making him the largest shareholder. However, on Jul 12, Elon Musk backed out from the $44 billion takeover deal, causing volatility to return to shares.

Twitter has filed a lawsuit against Elon Musk stating that he is obligated to complete his acquisition and has put the company in financial jeopardy. Twitter is preparing to hold a stockholder vote on the deal as early as mid-August and that Elon Musk is required to close the transaction within the following two days.

Twitter has witnessed an 11.2% decline in shares in the year-to-date period, compared with the Zacks Internet - Software industry’s slump of 51.6%.

What Our Model Says

According to the Zacks model, the combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that’s not the case here.

Twitter has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat in their soon-to-be-reported quarterly results.

KLA Corporation (KLAC - Free Report) has an Earnings ESP of +0.24% and a Zacks Rank of 3, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

KLA is scheduled to release fourth-quarter fiscal 2022 results on Jul 28. The Zacks Consensus Estimate for KLAC’s earnings is pegged at $5.46 per share, suggesting an increase of 23.2% from the prior year’s reported figure.

Advanced Micro Devices (AMD - Free Report) has an Earnings ESP of +1.34% and a Zacks Rank #3, at present.

Advanced Micro Devices is set to report second-quarter 2022 results on Jul 26. The Zacks Consensus Estimate for AMD’s earnings is pegged at $1.03 per share, which suggests an increase of 63.5% from the prior year’s reported figure.

STMicroelectronics (STM - Free Report) has an Earnings ESP of +0.82% and is Zacks Rank #3 at present.

STMicroelectronics is expected to release second-quarter 2022 results on Jul 28. The Zacks Consensus Estimate for STM’s earnings is pegged at 81 cents per share, which suggests an increase of 84.1% from the prior year’s reported figure.


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