Revenue and User Growth Are Driving Up Twitter Stock

Social media company Twitter reported financial results, this week, that beat investor estimates, but missed some analyst’s profit target.  This helped bump share price for the mobile sharing app as much as 9.7 percent by market close, on Thursday, rising from $38.12 to $41.78 by Monday morning.  

Furthermore, adjusted quarterly earnings saw growth of about 5 cents per share, falling short of market consensus estimates of 18 cents.  On the other hand, revenue of $841 million beat Wall Street expectations of $829 million. Starbucks had originally projected quarterly revenue to range between $770 and $830 million.  

Also, the company had, at one point, told investors third-quarter revenue to range between $815 and $875 million on an operating income between $45 and $80 million. Wall Street had been looking for $872 million in revenue on $90 million in operating income. This is what they feel they should be able to expect under generally accepted accounting principles. 

It might be important to also consider that average monetizable daily average users rose by 12 percent over the same period from last year, to finish this quarter at 139 million. 

Overall, the present operating income of $76 million has surpassed Twitter’s guidance range of $35 to $70 million.  Still, operating expenses rose 21 percent, to $278 million, which the company explains reflects higher revenue-share expenses associated with increased personnel and marketing costs as well as the cost of growing video content. 

Video content appears to be a particularly important growth area for Twitter. The company has been bulking up its live and on-demand video content partnerships to provide yet more content for users.  As a matter of fact, NBCUniversal said, on Thursday, they plan to livestream [at least some parts of] the 2022 Olympic Games. This, of course, is just Twitter’s most recent move in a series of new deals focused on increasing sports-related conversations on the messaging platform. 

In a conference call at the end of the week, Twitter CEO Jack Dorsey summarized this all pretty clearly. He said, “We know what we are now, and we know what sets us apart.  We know how people use the service and why people get value out of it. That allows us to really prioritize what matters most.”