Last Friday, Bhatia doubled down on his upgrade saying that recent product changes at the company and some new senior executive hires “have incrementally enhanced Twitter’s positioning.”
The current first-quarter consensus estimates from Thomson Reuters for Twitter’s net loss is $0.03 a share on revenues of $241.47 million. Twitter is scheduled to release first-quarter results after markets close on Tuesday.
Bhatia believes revenues will come in at $248 million and EBITDA will come in sharply higher at $31 million, compared with a consensus estimate of $18 million. That is a 3% jump over the consensus revenue estimate and an 83% leap over the EBITDA consensus.
The analyst sees monthly active users increasing 5% sequentially (25% year-over-year) and engagement — that is, total timeline views — up 6% sequentially (15% year-over-year).
On the monetization front, Bhatia expects a first-quarter advertising revenue increase of 2% sequentially (117% year-over-year) and EBITDA margins of 12.5%. If that pans out, margins will be down from 18.4% in the prior quarter, but up from 10.3% a year ago.
Shortly after Bhatia’s previous note on Twitter was published, the company introduced a new advertising feature that displays an ad to download an app from within Twitter’s mobile app. Bhatia said in his earlier note that this was a “potential catalyst to the stock, given the size of the market.”
Twitter shares traded down about 3.9% in the noon hour on Monday, at $40.01 in a 52-week range of $38.80 to $74.73.
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