What to Expect From Twitter Earnings

Media

Published: October 27, 2015 12:10 pm

Last Updated: April 6, 2020 5:52 pm

Twitter Inc. (NYSE: TWTR) is scheduled to report its third-quarter financial results after the markets close on Tuesday. The consensus estimates from Thomson Reuters call for $0.05 in earnings per share (EPS) on $559.59 million in revenue. The same period from the previous year had $0.01 in EPS on $361.27 million in revenue.

In the past month, Twitter has been incredibly active, whether it is announcing Jack Dorsey as permanent chief executive officer or Saudi Prince Alwaleed bin Talal disclosing a 5.17% stake in the company. This social media company is back at it again, with Dorsey at the helm, and the company just disclosed updated guidance as well as announced layoffs. The company has had an interesting month to say the least.

In one of his first moves as the permanent CEO, Dorsey is laying off a few hundred employees. His reasoning is that Twitter needs to become a stronger company and this is the road that the company must traverse to achieve this goal.

The company announced that it had approved a restructuring plan to reduce its staff by 336 employees, or 8% of its global workforce. This restructuring is part of an overall plan to organize around Twitter’s top product priorities and drive efficiencies throughout the company. Twitter intends to reinvest savings in its most important priorities to drive growth.

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Recently Steve Ballmer, former CEO of Microsoft Corp. (NASDAQ: MSFT), claimed a large stake in Twitter. He said in a tweet that he had bought 4% of Twitter, an investment of $1 billion. The share value jumped 5%. This is not the end of the Ballmer rally, particularly if his uncanny knowledge of the Internet world is right.

Ballmer’s bet is probably on Dorsey. Like Ballmer and his “partner,” Microsoft founder Bill Gates, Dorsey began his successful career at an early age. Dorsey has been a founder of both Twitter and mobile payment system Square.

Ahead of earnings a few analysts weighed in on Twitter:

SunTrust reiterated a Buy rating with a $38 price target.
Morgan Stanley downgraded it to an Underweight rating from Equal Weight and lowered the price target to $24 from $36.
Wedbush reiterated a Neutral rating and lowered its price target to $30 from $50.
Robert Baird reiterated a Hold rating.

So far in 2015, Twitter has underperformed the market, with shares down about 14% year to date, while over the past 52 weeks shares are down 38%.

Shares of Twitter were last seen trading at $30.99 Tuesday, with a consensus analyst price target of $37.62 and a 52-week trading range of $21.01 to $53.49.

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