Technology Stocks

Twitter Inc (NYSE:TWTR) Pops Back Higher, but Questions Remain on Platform “Health”

Twitter Inc (NYSE:TWTR) just reported its Q3 data. The key here was a bump in topline growth rate. That got the stock moving to the upside, though it faded in afternoon trade after finding resistance at the 200-day moving average.

Overall, the stock continues to be a bit of a mystery, failing to ever really get into gear with other major internet names during this bull market. Some internet conspiracies are out there, such as those who believe some kind of suppression mechanism is thwarting the stock’s ability to sustain any kind of serious rally. However, there may be bigger forces at work. The world seems to boil down to two types of people: those that like twitter and those that think of it a bit like having to stick your head in a dumpster without a nose plug.

Twitter Inc (NYSE:TWTR) frames itself as a company that “operates as a platform for public self-expression and conversation in real time.”

However, there are other ways to frame the company’s operations.

I just asked a person on an elevator what he thought of the company. He was headed up to an office for Mensa members after successfully completing a surgical procedure to remove a tumor from the parietal lobe of an otherwise healthy teenager. Here is what he said, “Twitter is the bane of the modern world, the stupid-maker, and the destroyer of generations and democracies. Have you ever read the comment section under a YouTube video about a teenage celebrity heading into drug rehab? That’s basically 90% of Twitter content.”

Beyond that, the company is the owner of some of the most valuable cyber real estate in the history of mankind (like a monopoly on a digital sewage pipe system that spans the planet), and yet, never seems to be able to get serious momentum going because no one has ever truly figured out how to monetize it properly. That said, according to its recent earnings, the company is slowly but surely starting to figure it out.

The company offers various products and services, including Twitter that allows users to consume, create, distribute, and discover content; and Periscope, a mobile application that enables user to broadcast and watch video live with others. It also provides promoted products and services, such as promoted tweets, promoted accounts, and promoted trends, which enable its advertisers to promote their brands, products, and services. In addition, the company offers a set of tools, public APIs, and embeddable widgets for developers to contribute their content to its platform, syndicate and distribute Twitter content across their properties, and enhance their Websites and applications with Twitter content. Further, it provides subscription access to its public data feed for data partners.


Better Poop GIFs?

We started off by noting that TWTR recently hit the wires with the announcement of the company’s Q3 earnings.

As we see it, the ultimate problem here is about the platform’s lack of “health” (the sewage factor we talked about). And solving that will be difficult to say the least. Management noted that, but did not present concrete solutions.

By the numbers, the company reported Q3 (Sep) earnings of $0.21 per share, $0.07 better than the S&P Capital IQ Consensus of $0.14; revenues rose 28.5% year/year to $758 mln vs the $700.75 mln S&P Capital IQ Consensus. Advertising revenue totaled $650 million, an increase of 29% year-over-year. Total ad engagements increased 50% year-over-year. Cost per engagement (CPE) decreased 14% year-over-year. Data licensing and other revenue totaled $108 million, an increase of 25% year-over-year. US revenue totaled $423 million, an increase of 28% year-over-year. International revenue totaled $335 million, an increase of 30% year-over-year.

Average daily active users (DAU) increased 9% year-over-year, compared to 14% in the same period of the previous year and compared to 11% in the previous quarter.

Average monthly active users (MAU) were 326 million for Q3 vs. 329-331M guidance, compared to 330 million in the same period of the previous year and compared to 335 million in the previous quarter, impacted by a number of factors including: GDPR, decisions we have made to prioritize the health of the platform and not move to paid SMS carrier relationships in certain markets, as well as a product change that reduced automated usage and a technical issue that temporarily reduced the number of notifications sent.

Guidance: Sees Q4 Adjusted EBITDA to be between $320 million and $340 million.

Leave a Comment

Your email address will not be published.