Will Twitter's (TWTR) Earnings Disappoint Again? - Analyst Blog
28 Avril 2014 - 8:00PM
Zacks
Twitter Inc.
(TWTR) is set to report first-quarter 2014 results on Apr
29. Last quarter, Twitter disappointed by reporting a loss of $1.41
per share, which was significantly wider than the Zacks Consensus
Estimate of a loss of 10 cents.
Let’s see how things are shaping up for this quarter.
Key Catalyst
Investors are expected to keenly follow Twitter’s user growth rate,
engagement and monetization in the first quarter. Last quarter,
revenues surged 116.2% year over year and 44.0% quarter over
quarter to $242.7 million. User engagement in the form of favorites
and reTweets improved more than 35.0% on a year-over-year
basis.
Growth Factors this Past Quarter
Per eMarketer, Twitter’s maturing user base is a major concern for
its growth abilities. In such a scenario, user engagement gains
significant importance in order to limit churn rate to other social
sites such as Facebook (FB) and LinkedIn
(LNKD).
Twitter continues to launch new features that are aimed at driving
user engagement. The company allowed Vine application users to send
private text messages along with videos to their network contacts
as well as outsiders.
However, we note that Twitter’s recent new features that are
similar to Facebook have failed to impress users. On the other
hand, the introduction of photo tagging feature for
Apple’s (AAPL) iOS and Google’s
Android and an expected music service are the key near-term growth
drivers.
Earnings Whispers?
Our proven model does not conclusively show that Twitter is likely
to beat earnings this quarter. That is because a stock needs to
have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3
for this to happen. That is not the case here as you will see
below.
Zacks ESP: The Most Accurate estimate stands at
loss of 26 cents per share that coincides with the Zacks Consensus
Estimate. Hence, the difference is of 0.00 %.
Zacks Rank: Twitter’s Zacks Rank #2 (Buy) when
combined with a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 and 5 (Sell-rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revisions momentum.
APPLE INC (AAPL): Free Stock Analysis Report
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LINKEDIN CORP-A (LNKD): Free Stock Analysis Report
TWITTER INC (TWTR): Free Stock Analysis Report
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