Twitter Inc earnings are set to arrive right after the market closes down for the day on Tuesday, October 27. The report will be the first under the firm’s new management team, and Jack Dorsey lead the firm as temporary CEO the whole way through the quarter. Wall Street is looking for something special, and user numbers are going to dominate discourse.
Robert Peck of SunTrust reckons that the coming earnings report could be a solid one for Twitter. In a report published on Monday morning Mr. Peck, who is perhaps the most prolific Twitter analysts, said that he’s looking for shares to hit $38. The analyst says that user numbers are looking strong for the three months through September, but he’s not the only one speaking out on the matter.
Twitter Inc users are confusing
Mr. Peck cited a report from JNFE Consulting as support for his idea that Twitter user numbers will come i strong. According to that report, there won’t be any “near term impact to Twitter MAU’s, expecting several million net adds this quarter.” A few million new users would mean a lot to Twitter, any way the firm has to show it’s still growing could help to woo Wall Street.
MAU adds are forecast to come in at 3 million in Q3. That would beat the 2 million the firm recorded in the second quarter, but it would still leave the firm far behind the user base growth of far bigger firms like Facebook, and even some of the Menlo Park firm’s smaller apps.
Michael Pachter of Wedbush reckons that the constraints on user growth will keep hurting Twitter. In the view of the analyst, user growth has been “slow to materialize.” That could hurt shares deeply in the hours and days after its next earnings report is released. Twitter just won’t be able to escape the tyranny of user metrics, and that theme is going to loom over its report.
Marking Twitter earnings
User numbers, and user growth, are the best indicator of the success of a web-based firm, and that number will be the major focus for investors in the coming report. There are other numbers coming, however, and Twitter is going to give us a good look at what’s going on inside its business on Tuesday.
Wall Street is looking for the firm to show earnings per share of just under five cents by consensus. Sales for the full period are thought to have come in at $559M. In the same three months of last year Twitter earned one cent per share on sales totaling $351M.
Adam Bain, who served as the firm’s head of global revenue, was instrumental in driving those numbers up over the past year. He was given the job of COO during Twitter’s reorganization, and his part will become more and more important going forward.
Twitter has a wide array of problems. It doesn’t earn enough money, Instagram is shouldering in on its territory, employees are running for the exits, and Twitter is firing those that don’t want to leave. Despite those issues, analysts and investors are going to focus almost solely on the firm’s user numbers after the earnings release on Tuesday.
The way the firm’s shares move after its numbers appear will likely be dictated by Wall Street’s reaction to those user numbers, but there’s no decent model by which to measure them.