Twitter expecting to turn a fourth-quarter profit

The company continues to battle with monetising its subscribers and increasing its user numbers. 

Twitter sign
Source: Bloomberg

On Thursday 5 February Twitter is due to post its fourth-quarter figures. The adjusted earnings per share are due to improve from $0.01 up to $0.061 and the sales are also called to increase from $361.266 million up to $453.788 million. Having made a loss of $175.305 million last quarter, this time round Twitter is expected to make a pre-tax profit of $45.273 million.

Of those institutions that follow Twitter, 18 have it as a buy, 21 have it as a hold and three as a sell. Even though the support is broadly undecided, the 12-month price target of $50.15 offers considerable upside from today’s $37.20 price. In comparison to many of the major US corporates that I have written about, a 35% premium is considerably attractive possibly reflecting the early stage in the company’s growth cycle.

Twitter has launched two new functions for its product. The first enables multi-person private conversations, and the second is 30 second video content. As with any new changes there will be those who do not like them, but the majority should deem them as improvements.

These longer running video contents will be the precursor to even longer videos — a revenue stream that could prove particularly successful especially when you consider how popular twitter is with politicians, stars and athletes. The video functionality is still being rolled out to users but so far the reviews have been very kind about the practicality, ease of use and end product.

The last couple of months have seen the shares bumping along just above the $36 level. However, these latest developments should open up the attractiveness of Twitter to another stream of potential users and reinvigorate its share price.

Twitter chart

IG offers extended trading hours on over 30 key US stocks, including Twitter, until 1am Mon-Thurs and 10pm Fri (London time).

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