Twitter (TWTR) has been on fire since its November IPO, posting a gain of over 150% — enough to make TWTR stock one of 2013’s top offerings.
Still, there have been several big-time swings along the way for Twitter stock investors … and we’ll probably see more volatility in TWTR tomorrow, Feb. 5. That’s because fourth-quarter Twitter earnings (and its first report as a public company) will be released after the bell.
Another interesting tidbit: The company will allow users to ask questions for the Twitter earnings call using the handle @TwitterIR and a #TWTRearnings hasthtag.
So what should you keep an eye on in the Twitter earnings report? Here are four things TWTR stock investors should watch:
#1. Twitter Earnings Forecast
The Street is looking for revenue of $217.8 million and a net loss of 2 cents per share in the Twitter earnings report. And there is a good chance that TWTR can hit the numbers. Perhaps the most encouraging factor is Facebook (FB), which reported a blow-out quarter last week. Much of its growth came from mobile ads. Oh yeah, and Twitter gets over 65% of its ad revenue from mobile, while Facebook gets about 53%. Strong mobile growth could easily send TWTR stock higher.
There are hints that TWTR is looking at e-commerce as a new revenue stream, and more details could be revealed in the Twitter earnings release. The idea is that a company will be able to set up product pages, which are linked to tweets and “buy” buttons (evidence of this came from a recent report from Re/Code).
While ad opportunity is large for TWTR, it does make sense to try for another revenue stream. Besides, Twitter has already become a top source for recommendations of products.
Yet TWTR stock investors should have some caution. As seen with Facebook, it is not easy to leverage e-commerce capabilities within a social platform. Keep in mind that its Gifts program was a failure. For the most part, users go to social networks to connect with friends and share information … not necessarily to find things to buy.
#3. Black Friday and The Super Bowl
Twitter is an ideal platform for providing content around events and two huge ones — Black Friday and the Super Bowl — took place recently. Well, these events are huge to advertisers at least … and thus to TWTR stock. To capitalize on all this, Twitter has actually provided free consulting for crafting ads, such as with strategies for hashtags, according to a piece in The Wall Street Journal).
Some of the likely questions from investors in the wake of Twitter earnings: Was there traction with the ad campaigns? And is Twitter really now the de-facto “second screen” when viewing events?
#4. Twitter User Growth
This will certainly be a critical part of the Twitter earnings release, too. After all, the trends have been worrisome. The year-over-year growth in monthly active users was 46.82% in Q1 and 44.37% in Q2, showing a deceleration. Plus, the quarter-over-quarter momentum has also been slowing too, going from 10.27% in Q1 to 6.86% in Q2 to 6.13% in Q3.
No doubt, investors will want to see a reversal of these tends in the Twitter earnings release. If they don’t, TWTR stock could come under some pressure.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.