Analyst Sees Upside In Twitter Inc (TWTR) Q4 Report

1
Analyst Sees Upside In Twitter Inc (TWTR) Q4 Report
geralt / Pixabay

FBN Securities analyst Shelby Seyrafi maintains a Sector Perform rating for Twitter Inc (NYSE:TWTR) as she sees upside to FQ4 estimates after the company reports results.

We reiterate our Sector Perform rating on Twitter Inc (NYSE:TWTR) and see upside to our FQ4 estimates after it reports results (Wed., Feb. 5 ATM). Recent results from fellow online advertising peers Facebook Inc (NASDAQ:FB) and Google Inc (NASDAQ:GOOG) bode well for Twitter. We think that key investor focal points will be monthly active user (MAU) growth, engagement rate (Timeline Views/MAU) growth, and monetization (advertising revenue per 1,000 Timeline Views) growth. As the table below shows, we are modeling MAU growth of 36%, engagement rate growth of 10%, and monetization growth of 36%. A key concern in our initiation was that engagement rate growth has been decelerating (from 30% in FQ1 to 8% in FQ3), but we think that the recent exposure from its IPO should help engagement rate and MAU growth.

ValueWalk’s October 2022 Hedge Fund Update: Haidar Capital Surges 225%

reports 1660232581Welcome to our latest issue of ValueWalk’s hedge fund update. Below subscribers can find an excerpt in text and the full issue in PDF format. Please send us your feedback! Featuring investors exit long-short hedge funds, the oil market is now "broken", and Haidar Capital surges 225%. Q2 2022 hedge fund letters, conferences and more

As our detailed Advertising Revenue Model shows, we are modeling:

  • MAU to reach 251M (up from 232M in FQ3). 249M consensus.
  • Timeline Views to reach 175.2B (up 49% Y/Y). 173.7B consensus.
  • Timeline Views per MAU to reach 698 (up 10% Y/Y).
  • Advertising Revenue per MAU to reach $1.16 (up 36% Y/Y) with international ad revenue/MAU increasing to $.50 (still only 17% of the US level of $2.95, up from 14% in FQ3).

Twitter’s FQ4 results

For FQ4, we expect Twitter Inc (NYSE:TWTR) to report revenue of $215.5M (+92% Y/Y and in line with consensus of $217.8M) and NG EPS of -$.03 (vs. consensus of -$.02).

Twitter’s FQ1 guidance

For FQ1, we are modeling Twitter Inc (NYSE:TWTR)’s revenue at $214M (+87% Y/Y and slightly below consensus of $216.2M) and NG EPS of -$.05 (vs. consensus of – $.03).

Investor focal points

In addition to the aforementioned metrics, key investor focal points will include:

Mobile advertising ramp

We see mobile advertising increasing to 72% of advertising revenue from 70% in FQ1, but there could be upside here as mobile % has increased by 5pp two quarters in a row.

Actions to improve engagement rates

Since decelerating engagement rate growth is the weak link in its results so far, investors will want to hear about what actions Twitter Inc (NYSE:TWTR) is doing to improve engagement. Such actions could include improving the user interface.

Video opportunity

Investors want to hear about how Twitter expects its video-related advertising revenue to ramp. Twitter Inc (NYSE:TWTR) has Amplify (in-tweet video clips), a partnership with Nielsen (Nielsen-Twitter TV rating), and Bluefin (acquisition that allows for better targeting).

International country ramp

As of the end of CQ3 2013, Twitter Inc (NYSE:TWTR) sold advertising products in over 20 countries outside the US, and international was 27% of advertising revenue in CQ3 (we see this moving to 32% in CQ4).

No posts to display