TWTR: 4 Things to Watch for in the Twitter Earnings Report

The social network could be in for another tough time

     

After the market closes on Tuesday, Twitter (TWTR) will report its results for the first quarter. No doubt, there will be a lot of jittery investors. After all, when the company reported its Q4 report back in early February, Twitter stock got crushed and went on to lose about 36%.

Twitter185 TWTR: 4 Things to Watch for in the Twitter Earnings ReportOf course, the social sector has also suffered from a big sell-off during the same period. LinkedIn (LNKD) is down by 25%, Pandora (P) has lost 34% and Yelp (YELP) is off by 24%.

OK, so what can we expect from Twitter earnings? What will Wall Street be focused on? To see, here’s a look at some key factors:

Twitter Earnings Expectations

The consensus is for revenues of $241.47 million, up from $114.3 million in the same period a year ago. TWTR is also forecast to post a loss of 3 cents per share.

Given the continued strength in mobile advertising, it seems reasonable that the company will be able to hit the targets. But that may not matter too much. After all, Facebook (FB) had a solid Q1 and the stock still dropped (off about 5% within two days of the announcement). In other words, TWTR may need to have a blowout performance. That could be tough considering estimates are still at robust levels. And besides, Q1 is generally a soft period for ad spending.

User Growth

This is likely to be a major concern for investors. For the most part, TWTR has been experiencing a slowdown in user momentum.

In Q4, the company added a measly 9 million monthly active users (MAUs) and only 1 million came from the U.S. Those numbers amount to a lowly 3.8% sequential growth rate and was down from the 6.4% rate in Q3. The worry is that TWTR is generally too complicated to use for mainstream users. Consider that a staggering 44% of users have never sent a tweet, according to Twopcharts. It appears that TWTR suffers from a general lack of interest and very high churn.

But TWTR is making some moves to help turn things around. These include:

  • Redesign: If you checked out TWTR lately, you’ll notice that the user interface is much different. There is a larger profile image, larger fonts and more photos/videos. Yep, it looks more like Facebook!
  • New Features: These include things to help improvement engagement, such as with Twitter alerts and the capability to send/receive photos via direct messages.
  • Partnerships: TWTR has struck a variety of deals with media companies like British Sky Broadcasting and Comcast (CMCSA). The goal has been to integrate the service to allow users an easier way to share photos and videos.

All these make a lot of sense. But it is far from clear if they have done much to improve user growth.

 
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