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Twitter (TWTR) Joins Tech Club to Ditch Q1 View on Coronavirus Woes

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Twitter (TWTR - Free Report) is the latest casualty of the coronavirus pandemic. On Mar 23, in an 8k filing, this social media company announced withdrawal of its first-quarter 2020 revenue and operating income guidance due to the pervasive impact of the coronavirus (COVID-19) anxiety on advertiser demand. Notably, Twitter generated 86.4% of 2019 revenues from advertisements.

The company now expects first-quarter 2020 revenues to dip from the year-ago reported figure. Twitter’s previous projection for total revenues came in between $825 million and $885 million. The company reported revenues of $787 million in first-quarter 2019.

Moreover, this Zacks Rank #3 (Hold) player’s earlier forecast for operating income was between a breakeven and $30 million. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

However, management at Twitter stated that total monetizable DAU (mDAU), which measures the number of users, has been benefiting from frequent discussions on the burning issue of coronavirus and an improving product experience. Quarter to date, average total mDAU reached approximately 164 million, up 23% from 134 million in first-quarter 2019 and up 8% from 152 million in fourth-quarter 2019.

Twitter also scraped 2020 guidance for expenses, stock-based compensation, headcount and capital expenditures.
 

 

Coronavirus Compels Tech Giants to Scrap Views

The coronavirus outbreak that has claimed 16,653 lives is wreaking havoc on global trade, investments, tourism, supply chains and consumer confidence. Total number of infected persons is now 381,621, per the Johns Hopkins University data.

Twitter jumps on the bandwagon of technology companies who either withdrew their guidance or warned of missing expectations.

The list includes bigwigs like Apple (AAPL - Free Report) , Microsoft (MSFT - Free Report) , Microchip, Baidu, Cree, Hewlett-Packard Enterprise, HP, Nutanix, ON Semiconductor, PayPal, Qorvo (QRVO - Free Report) , Skyworks (SWKS - Free Report) , Universal Display, et al.



 

Apple is experiencing a negative impact from supply-chain disruption due to the outbreak of the coronavirus in China. On Feb 17, the company announced that it doesn’t expect to meet second-quarter fiscal 2020 revenue outlook due to iPhone supply constraints and lower demand in China. For second-quarter fiscal 2020, this Zacks #3 Ranked stock’s revenue view was between $63 billion and $67 billion.
 

Apple Inc. Price and Consensus

Apple Inc. Price and Consensus

Apple Inc. price-consensus-chart | Apple Inc. Quote

 

Meanwhile, on Feb 26, Microsoft announced that it may fail to meet its More Personal Computing’s third-quarter fiscal 2020 revenue expectation due to the coronavirus crisis in China. This Zacks Rank #1 stock’s prior revenue prediction came in between $10.75 billion and $11.15 billion.

 

 

Apple Suppliers, Travel Companies Worst Hit

Qorvo, a radio frequency chip supplier for Apple’s iPhone, lowered its fourth-quarter revenue expectation to $770 million. The figure was significantly down from the $800-$840 million range, guided earlier in late January by this Zacks #1 Ranked company. (Read More: Apple Supplier Qorvo Trims Q4 View on Coronavirus Woes)

 

Qorvo, Inc. Price and Consensus

Qorvo, Inc. Price and Consensus

Qorvo, Inc. price-consensus-chart | Qorvo, Inc. Quote

 

Skyworks, another chip supplier for Apple’s iPhone, also trimmed its revenue and earnings guidance for the second quarter of fiscal 2020 ending Mar 27, 2020. The stock with a Zacks Rank of 3 now anticipates revenues to be $760-770 million (midpoint being $765 million), down from its prior-anticipated band of $800-$820 million (midpoint being $810 million) citing weak customer demand due to the coronavirus disaster and its impact on smartphone supply chain. The revised revenue outlook indicates a decline of 6.5% considering the midpoint level.

Skyworks’ now expects non-GAAP earnings to be $1.34 per share, implying a decrease from the prior guidance of $1.46.

 

 

Further, leading OLED provider Universal Display, another supplier of Apple, cautioned that coronavirus will adversely impact 2020 revenues by $40-$50 million. Universal Display expects revenues between $430 million and $470 million for the ongoing year.

Furthermore, Apple supplier Jabil’s second-quarter fiscal 2020 results were affected by higher expenses due to business interruptions caused by the coronavirus outbreak.

Meanwhile, Bookings Holdings and Expedia, two prominent tech-based travel companies, withdrew their guidance. Management at Trivago also stated that the coronavirus concern will significantly drain business volumes.

Conclusion

Twitter’s guidance withdrawal due to the coronavirus catastrophe on advertiser demand reflects the severity of the pandemic’s impact on economy. Soft advertiser demand can also ruin prospects of Facebook and Google, which recognize a huge portion of their revenues from advertisements.


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