Twitter Inc (NYSE:TWTR)
Twitter is edging up in the market today. Why? I really couldn’t tell you. To be honest, I think that investors are hopeful that the company will do well this earnings season. You see, the company will be releasing its earnings report tomorrow, July 26th, after the closing bell. However, there’s really not a strong case for all of this excitement. Today, we’ll talk about what analysts are expecting to see, and why TWTR earnings likely aren’t going to be positive.
Even The Best Guidance Isn’t Good For TWTR
As usual, Twitter released guidance with regard to what it expected to do in the quarter. Sales for the quarter are expected to come in somewhere between $590 million and $610 million. While that sounds like quite a bit of money, it’s actually incredibly weak. In fact, even if the company hits the nail on the head, generating revenue of $610 million, the quarter would represent the slowest quarter of revenue growth since the company went public. That’s not a good sign.
Analysts Aren’t Fans!
While I never advise blindly following the opinions of analysts, in this particular case, it seems as though they’ve hit the nail on ghe head. In fact, just this month alone, three firms have downgraded the stock. At this point, only 6 out of 32 analysts have a bullish opinion on TWTR. With such consistent downside opinions from analysts, it’s clear that there’s not much to be excited about here.
User Growth Isn’t Going To Amaze
At this stage in the game, investors are going to pay attention to revenue and earnings. However, that data isn’t going to be quite as important as user growth. When it comes to user growth, I’m simply not expecting to see much by way of positive news.
At the end of the day, TWTR has been struggling with user growth for some time now. After the resignation of Dick Costolo from the CEO position, I will admit that I got a bit excited. However, when it was announced that Jack Dorsey would be moving from interim to permanent CEO, I got concerned again. Unfortunately, it seems as though those concerns were incredibly valid. While Dorsey was able to build investor excitement for a short while, we haven’t seen anything from his plan turn into fruitful results. At the end of the day, without user growth, revenue growth is going to plateau. Considering the relatively weak guidance for this quarter, that plateau seems to be getting closer as user growth seems to be harder and harder to achieve for the company.
What We Can Expect To See Moving Forward
Moving forward, I would love to say that I’m expecting to see growth, but that simply isn’t the case. Unfortunately, based on the data at hand, I maintain an overwhelmingly bearish opinion on the stock. For Twitter, the bottom line isn’t measured in dollars and cents. Instead, it’s measured in user growth. Considering the fact that most people know what Twitter is, but still refuse to use the social network, I’m not expecting to see any positive user stats any time soon. As a result, I’m expecting to see long run declines out of TWTR.
What Do You Think?
Where do you think TWTR is headed moving forward and why? Join the discussion in the comments below!