Hat Tip: The Reformed Broker
Earlier tonight, Twitter announced its much anticipated first earnings report since going public. Despite exceeding top and bottom line expectations, the microblogging company’s shares dropped sharply in after-hours trading mainly due to concerns over slowed user growth.
Here are some highlights from Twitter’s earnings report:
- Twitter posted earnings of 2 cents a share, excluding one-time items, on sales of $243 million, easily topping expectations for loss of 2 cents a share on revenue of $218 million.
- In the fourth quarter, Twitter said it added just 9 million, or 3.8% more, new monthly active users to 241 million, down from 6.4% growth in the previous period. It was the fourth straight quarter of slowing growth.
- Twitter did show it is drawing more revenue from its users. The company said it made $1.49 per 1,000 timeline views in the quarter, up from 97 cents in the previous three months. Twitter has been incorporating improved metrics and adding to new ad products to woo more advertisers.
- Going forward, Twitter sees 2014 revenue between $1.15 billion to $1.2 billion, with revenue for the first quarter of the year expected to range between $230 million to $240 million.
Here are two charts relating to Twitter’s ad revenue and monthly active users:
Twitter, the popular social networking and microblogging service, has been on fire since it went public on November 7th, 2013. In fact, Twitter’s shares have increased a remarkable 124% since its IPO. While many investors are still intrigued by Twitter’s potential and growth prospects, some analysts are expressing concern over Twitter’s current share price as being “too expensive.”
Against this backdrop, here is a look at how analysts have rated Twitter over time:
Twitter priced its IPO at $26 a share. At that level, Twitter seemed like a good deal. Tough luck though for most retail investors who could not get in at the IPO price.
Against this backdrop, Twitter’s shares opened up today at $45.10 on the New York Stock Exchange, under ticker TWTR. The stock climbed as high as $50.09 before closing at $44.90, up 73%. That values the company at more than $31 billion.
One factor that contributed to Twitter’s big gains today was its shares were heavily oversubscribed, which forced some investors to wait until the stock started trading today to buy it. According to USA Today, Twitter’s share gains were also driven by optimism about the company’s long-term opportunities. The service is already a global media phenomenon, but it has a lot fewer users than Facebook, and the company’s business model is still evolving. That leaves room for investors to imagine great improvements from Twitter going forward.
I’m hoping Twitter pulls back a little for a better entry point, preferably under $33.
Source: USA Today
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With the way some tech and social media stocks are performing today, it’s starting to feel a little like the dot-com bubble era again. In an attempt to avoid Facebook’s notorious IPO stumble, Twitter revealed more modest ambitions, saying its initial offering would raise up to $1.6 billion and value the company at up to about $11 billion.
The valuation was more conservative than the $15 billion some analysts had expected for the social media phenomenon, potentially attracting investors who might consider the money-losing company’s listing price a better deal, with room to rise.
Twitter had signaled for weeks it would price its IPO modestly to avoid the sort of stock plummet that spoiled Facebook’s coming-out party. It said on Thursday it intends to sell 70 million shares between $17 and $20 apiece, raking in up to $1.4 billion for the company.
If underwriters choose to sell an additional allotment of 10.5 million shares, the offer could raise as much as $1.6 billion.
So when should we expect Twitter to make its public debut? It appears Twitter’s IPO date will likely be November 7. Specifically, The New York Times notes:
Twitter has also moved up the pricing of its offering by more than a week, to Nov. 6. That means that the social network would then begin trading on the New York Stock Exchange, under the ticker symbol TWTR, the next day.
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