Twitter aiming for strong Q1

The social media company will reveal its first-quarter figures on Tuesday 28 April, which are expected to make up for its disappointing finish to last year.

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The firm had a good 2014, but the year ended on a low note as it only added four million new users in the fourth-quarter. This compares with adding between 13 million and 16 million users in the first three quarters of the year.

The release of Apple’s iOS 8 coincided with Twitter’s final quarter, and was blamed for the drop-off in new users during the final stretch of the financial year. But the company foresees new user growth in the first-quarter of 2015 to be similar to that of the first three quarters of 2014. Even though the company added a relatively small number of new clients at the back end of last year, the monthly active users (MAU) jumped by 20% year-on-year.

Timeline views on Twitter increased by 23% in the final-quarter to 182 billion, but the social media firm will no longer release this metric as it is altering the system so users can catch up on what they missed out while logged out. Twitter has struck a deal with Google which will enable Tweets to show up in the search engine, but this will not be available for several months.

Twitter has 288 million MAU, whereas Instagram and Facebook have 300 million and one billion respectively. The social media sector only has so much more to grow by, and Twitter will make it more accessible for those who are logged out of their accounts.

Turning our attention to the financials, fourth-quarter advertising revenue rose by 97%. This exceeded market expectations, and the firm has given a guideline of $440-$450 million for the first-quarter revenue of 2015.

When Twitter announces its first-quarter results, the consensus is for revenue of $455 million and earnings per share (EPS) of three cents. The fourth-quarter numbers exceeded expectations, with revenue of $479 million and EPS came in at 12 cents, while the market was anticipating $453 million and six cents respectively.

Equity analysts are bullish on Twitter, and out of the 43 recommendations, 20 are buys, 21 are holds, and two are sells. The average target price is $53.70 which is 4.45% above the current price. Investment banks are exceptionally bullish on Facebook, and out of the 54 ratings, 46 are buys, seven are holds, and one is a sell. The average target price is $92.87 which is 11% above the current price.

The number of short positions being taken out on Twitter since the fourth-quarter figures were announced in February has declined by 12.5%.

Currently acting as support is the $50 mark, and $52 will be the first target for the stock. A move above that level will bring $53 into play. If $50 is punctured then the support in the $48.65 region will be the downside target.

Twitter is available for extended hours trading.

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