Twitter Inc (NYSE:TWTR) will release its quarterly earnings report on Wednesday, and just ahead of it, the company’s stock declined to record low levels. On Monday, a decline of 5% was seen in the company’s shares after they dipped to as low as $14.73 before closing at $14.90.
No “imminent” solution
In July, Twitter co-founder Jack Dorsey took over as CEO, and since then, the company’s shares have lost more than half their value. The micro-blogging firm, which is already struggling from slowing user growth, experienced sharp backlash over the weekend. Users were furious after a report that the company plans to make some fundamental changes to timelines.
Dorsey aims to make Twitter more accessible to mainstream users, and under his watch, the company may tweak its reverse chronological timeline and allow longer tweets. Wedbush Securities analyst Michael Pachter expects the company to again report stagnant user growth tomorrow.
Odey Asset Management's Special Situations Fund was down 3.2% in March, compared to its benchmark, the MSCI World USD Index, which was up 3.3%. Through the end of March, the fund is up 8.7%, beating the benchmark's return of 4.9%. Q1 2021 hedge fund letters, conferences and more Odey's Special Situations Fund deploys arbitrage and Read More
“Twitter remains difficult to use relative to its peers and a solution does not appear to be imminent,” Pachter said in a research report.
Some optimistic on Twitter
For the fourth quarter of fiscal 2015, Twitter is not expected to register significant growth in revenues or monthly active users (MAUs) also. However, this could be a short-term trend despite lukewarm expectations and the subsequent impact on the stock, believe analysts at Cantor Fitzgerald.
Cantor expects Twitter’s MAU growth to remain flat. It is estimated that the company’s MAUs will grow by just 1 million to 321 million users. Though the number of unique visitors in the U.S. grew 17.7% year over year (YoY) in December, on the basis of sequential trends, analysts believe this will not help Twitter demonstrate a turnaround in users or engagement. The possibility exists that the company may register negative net adds in the quarter, which would be the first time since the company went public.
Revenues for the quarter are expected to come in at $708.9 million, representing an expected 48% YoY growth. On the other hand, consensus expectations are at $710 million. Ad revenue is expected to grow 49.6% on a YoY basis. The company registered 60.3% YoY ad revenue growth in the third quarter.
With marketers capitalizing on the online consumer base and increasing their social media-based advertisement expenditures, Cantor Fitzgerald expects growth of 47% on a YoY basis for Twitter’s ad revenue for fiscal 2016.