Twitter will report earnings after the market close tomorrow, February 5th, 2015. The stock is down since the market correction in october last year. Down about 40%. Investors are concerned about slower growth, and estimates are as low as they`ve ever been compared to the Wall Street consensus.
The estimates this time will come in-line with Wall Street expectations, rather than beat by a few cents per share as investors have gotten used to. Last quarter was not a good one for Twitter. The stock dropped down -13% as Twitter posted an earnings miss against the investors. They disappointed with MAU`s guidance.
It`s very important for a company like Twitter to have a lot of followers being active, and Twitter had 284 million monthly user accounts at the end of the third quarter. That`s 23% up year over year. By comparison, Facebook had 1,39 billion monthly active users (Q4). That`s an increase of 13%.
User activity is more important than billions of users on your platform. How many have a Facebook account, but don`t use it? This is why MAU is so important. Timeline views increased 14% YoY, but timeline views per MAU`s fell 7% last quarter, and that doesn`t matter so much as investors will watch the interaction between active users and timeline views.
Twitter are focusing more on «ad revenues per thousand timeline views» as others have different measures like revenue per user. Target marketing can be easier on Twitter than Facebook as the platform is for the pro`s, and it will be difficult to compare Facebook and Twitter on this case.
Facebook will have more appeal for the masses than Twitter. Twitter is better used for news and financial services and I`m in doubt that Twitter can build a mainstream platform like Facebook did over years. Expectations for Twitter is probably too high?
Twitter traded at $30 last summer and that`s close to its IPO price, but it have bounced and look like a growth stock right now.
Timeline views is $4,28 in the U.S and $0,84 outside the U.S, and advertising revenues per thousand timeline views increased by 83% YoY on Q3. It came in at $1,77.
The caution in the estimates this time may be a positive for Twitter than it were for Facebook last week. Small earnings beat could be a catalyst to the upside. Investors are looking for 88% revenue growth this quarter which is down from the triple digit gains Twitter has posted since its IPO. Earnings are expected to come in at 6 cents per share, which is all time high.
Twitter, tomorrow after the market close, February 5th, 2015.
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Ket Garden
Shiny bull 