Shares of Twitter moved about 0.6% lower on Wednesday, which was slightly wider than the losses of broader indexes, in the final trading session before it reports earnings. The social media company will announce its latest results on Thursday morning in what is sure to be a closely-watched earnings report.
Twitter’s momentum cooled slightly ahead of its report, but the stock has gained nearly 30% since its Christmas Eve lows and is looking to regain some of its magic from the past two years.
After several disappointing stretches, Twitter turned a corner in 2017, tallying returns of 47% on the back of renewed profitability and user trends. The iconic micro-blogging platform appeared poised to maintain that strength throughout 2018 until questions about the sustainability of the social media business and turbulent market-wide trading took out much of the stock’s steam.
Still, Twitter shares finished last year up about 20%, and investors looked ready to keep Jack Dorsey’s company on the menu in the New Year.
Twitter has a chance to set the tone for 2019 with its report tomorrow. Analysts are expecting adjusted earnings of $0.25 per share and revenue of $873 million, according to our latest Zacks Consensus Estimates. These results would represent year-over-year growth rates of 31.6% and 19.3%, respectively.
The latest earnings estimate revisions for Twitter have been less than favorable, however. For the to-be-reported quarter, Twitter has witnessed four negative revisions over the past 60 days, including one in just the last week. Twitter has seen no positive revisions for the period in this time. This activity has knocked a penny off the earnings consensus.
Nevertheless, there is an interesting trend developing in Twitter’s most recent earnings estimates. We use the Zacks Most Accurate Estimate to gauge this. Whereas the Zacks Consensus measures an average of all available estimates, the Most Accurate read emphasizes recency. This might include revisions to prior estimates, but it can also include brand new estimates that might be higher or lower than the consensus.
Heading into the report, Twitter has a Most Accurate Estimate of $0.27 per share. Our data also shows at least one analyst who has predicted quarterly earnings as high as $0.32 per share for the previous quarter. These figures would imply that a result above the $0.25 benchmark might not be that surprising.
Twitter investors will also be interested in what the company posts in key report items. For instance, our consensus estimates are calling for Twitter to report monthly active users (MAUs) of 319 million for the quarter. This would mark a loss of 11 million MAUs from the prior-year quarter and 7 million from Q3. The platform has shed users in recent periods in the face of new regulatory policies in Europe and as it moves away from SMS-only MAUs.
Regulatory pressure is certainly a long-term concern for Twitter, but a decision to move away from the low-quality, text-only user base underscores management’s focus right now. These MAUs don’t see ads, so even though the total number of users is likely to be down, Twitter’s advertising revenue is expected to climb 18% to $760 million.
Finally, our consensus estimates are showing $108 million in revenue for Twitter’s data licensing segment in the quarter. This would be about flat sequentially but up over 24% year over year. This controversial segment of the business helps contribute to profits but might raise some eyebrows in an increasingly privacy-aware society.
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Twitter (TWTR) Stock Down Ahead of Earnings: What To Expect
Shares of Twitter moved about 0.6% lower on Wednesday, which was slightly wider than the losses of broader indexes, in the final trading session before it reports earnings. The social media company will announce its latest results on Thursday morning in what is sure to be a closely-watched earnings report.
Twitter’s momentum cooled slightly ahead of its report, but the stock has gained nearly 30% since its Christmas Eve lows and is looking to regain some of its magic from the past two years.
After several disappointing stretches, Twitter turned a corner in 2017, tallying returns of 47% on the back of renewed profitability and user trends. The iconic micro-blogging platform appeared poised to maintain that strength throughout 2018 until questions about the sustainability of the social media business and turbulent market-wide trading took out much of the stock’s steam.
Still, Twitter shares finished last year up about 20%, and investors looked ready to keep Jack Dorsey’s company on the menu in the New Year.
Twitter has a chance to set the tone for 2019 with its report tomorrow. Analysts are expecting adjusted earnings of $0.25 per share and revenue of $873 million, according to our latest Zacks Consensus Estimates. These results would represent year-over-year growth rates of 31.6% and 19.3%, respectively.
The latest earnings estimate revisions for Twitter have been less than favorable, however. For the to-be-reported quarter, Twitter has witnessed four negative revisions over the past 60 days, including one in just the last week. Twitter has seen no positive revisions for the period in this time. This activity has knocked a penny off the earnings consensus.
Nevertheless, there is an interesting trend developing in Twitter’s most recent earnings estimates. We use the Zacks Most Accurate Estimate to gauge this. Whereas the Zacks Consensus measures an average of all available estimates, the Most Accurate read emphasizes recency. This might include revisions to prior estimates, but it can also include brand new estimates that might be higher or lower than the consensus.
Heading into the report, Twitter has a Most Accurate Estimate of $0.27 per share. Our data also shows at least one analyst who has predicted quarterly earnings as high as $0.32 per share for the previous quarter. These figures would imply that a result above the $0.25 benchmark might not be that surprising.
Twitter investors will also be interested in what the company posts in key report items. For instance, our consensus estimates are calling for Twitter to report monthly active users (MAUs) of 319 million for the quarter. This would mark a loss of 11 million MAUs from the prior-year quarter and 7 million from Q3. The platform has shed users in recent periods in the face of new regulatory policies in Europe and as it moves away from SMS-only MAUs.
Regulatory pressure is certainly a long-term concern for Twitter, but a decision to move away from the low-quality, text-only user base underscores management’s focus right now. These MAUs don’t see ads, so even though the total number of users is likely to be down, Twitter’s advertising revenue is expected to climb 18% to $760 million.
Finally, our consensus estimates are showing $108 million in revenue for Twitter’s data licensing segment in the quarter. This would be about flat sequentially but up over 24% year over year. This controversial segment of the business helps contribute to profits but might raise some eyebrows in an increasingly privacy-aware society.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>