Twitter Inc (NYSE:TWTR) stock has been an investors’ delight since the issue of its IPO, soaring as high as 150%, which has made the stock one of the top offerings. Investors could see more volatility in the near future as the micro-blogging site will report its fourth quarter earnings (its first as a public company) after the bell today.
Facebook numbers inspiring for Twitter
For the fourth quarter, analysts are expecting revenue of $217.8 million and a net loss of 2 cents per share. Twitter Inc (NYSE:TWTR) looks well positioned to post those numbers. Facebook, on the other hand, reported very strong earnings, mostly from mobile ads. This is good news for Twitter, which gets over 65% of its ad revenue from mobile, whereas Facebook Inc (NASDAQ:FB) gets around 53%.
In the upcoming earning release, the company could also announce new segments like e-commerce as a new revenue stream. No doubt, Twitter Inc (NYSE:TWTR) is in a strong position on the back of its ad revenue stream, but searching for other revenue streams does make sense. The micro blogging site has already become the top source for recommendations of products.
However, Twitter Inc (NYSE:TWTR) investors should be cautious as previously Facebook investors have also seen that it is not easy to leverage e-commerce capabilities within a social platform. Facebook failed to make its gift program a hit because most of the users are concerned with friends and sharing information, and not buying things.
Declining user growth a concern
Twitter is the most sought-after platform to give information about events. Two big events, Black Friday and the Super Bowl, took place recently. Both the events demand massive advertising and, therefore, are important to the company. To capitalize on these events, Twitter Inc (NYSE:TWTR) has already provided free consulting for crafting ads such as strategies for Hashtag, according to a report from the Wall Street Journal.
Another factor to watch during Twitter’s earning release is user growth because the trends have been not so good. The year over year growth in monthly active users (MASUs) was 46.82% in the first quarter and 44.37% in the second quarter. Also, the quarter over quarter momentum is sluggish dropping from 10.27% in the first quarter to 6.86% in the second quarter to 6.1% in the third quarter.