Twitter PT cuts pour in following earnings

At least 8 firms have slashed their Twitter (TWTR) PTs following a Q1 report that featured underwhelming full-year guidance and failed to dispel concerns about slowing MAU/Timeline view growth.

"Over the medium term, we continue to expect Twitter's stock to underperform the market in the face of (what is likely) a multiple quarter transition on user engagement & ad product adoption," says UBS' Eric Sheridan (Sell, $35 PT). He's also (unsurprisingly) worried about a May 6 lockup expiration that will allow 84% of basic shares to be sold.

Topeka's Victor Anthony (Buy, $60) is more optimistic. "We reckon that we are witnessing Facebook part two. Instead this time it is faster user growth that investors are seeking rather than faster mobile monetization." Cowen's John Blackledge (Underperform, $26) isn't convinced. "These results appear to confirm our suspicion that Twitter's total addressable market is fundamentally smaller than Facebook."

On the CC (transcript), CEO Dick Costolo talked up the value of a new integrated bidding system that will allow advertisers to bid across multiple ad types, and noted MoPub's ad network now reaches 1B Android/iOS users. CFO Mike Gupta mentioned "ad engagements" rose 28% Q/Q, but added cost per ad engagement fell 20%. He also stated non-GAAP costs/expenses rose 104% Y/Y.

When questioned about softening Timeline views per MAU. Costolo suggested the figure paints an incomplete picture, given Twitter's efforts to improve engagement per Timeline view. He defended his point by noting favorites/retweets were up 26% in Q1.

TWTR -12.6%. Q1 results, guidance/details.

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Comments (4)
  • 3D Investing
    , contributor
    Comments (1552) | Send Message
    "Instead this time it is faster user growth that investors are seeking rather than faster mobile monetization."


    That doesn't make sense. Twitter has a higher % of MAU and revenue from mobile than facebook.
    30 Apr 2014, 10:32 AM Reply Like
  • zeeman1
    , contributor
    Comments (93) | Send Message
    As usual, these firms change their targets after the stock has moved 12%. Meanwhile, prudent retail investors have been yelling sell sell for months even when share price was in 70s. These analysts need to learn a bit and someone needs to add a bit of boldness in their coffee.
    30 Apr 2014, 10:36 AM Reply Like
  • Chris Lau
    , contributor
    Comments (4151) | Send Message
    These analysts need to be active users on Twitter. They'd have known MAU and posts were declining sharply month after month. Twitter is nothing close to what it was last year or the year before. The biggest hint was Twitter essentially copying the Facebook design and then launching it days before quarterly results.


    Users moved on.
    30 Apr 2014, 10:46 AM Reply Like
  • J Mintzmyer
    , contributor
    Comments (8465) | Send Message
    I'm guessing next quarter will be even more devastating.


    That being said, the FB gimmick of a separate messenger ad will likely KILL their ad revenue growth for mobile users.
    30 Apr 2014, 12:20 PM Reply Like
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