Twitter Posts Mixed Results For Q1

Social networking company Twitter (NYSE: TWTR) reported a mixed set of results for the first quarter of FY2022, topping earnings estimates massively,but falling slightly short of revenue expectations.

Shares of the social networking giant gained 1.1% on April 28 to close at $49.11 following the earnings announcement.

This perhaps marks the last quarterly results announced by the company as a publicly-listed company, after the Board agreed to sell the company to Elon Musk for $44 billion.

Q1 Numbers

Notably, the company reported stellar quarterly earnings of $0.90 per share, massively higher than analysts’ estimates of $0.03 per share. Furthermore, it was more than five times the earnings of $0.16 per share reported for the prior-year period.

However, revenues jumped 16% year-over-year to $1.2 billion but modestly lagged consensus estimates of $1.22 billion.

The increase in revenues reflected a surge in advertising revenues, which increased 23% to $1.11 billion, offsetting a 31% decline in Subscription and Other revenue.

Average monetizable daily active users (mDAU) grew 15.9% year-over-year to 229.0 million during the quarter.

The company refrained from providing any forward-looking guidance and withdrew previously provided goals, given the pending acquisition of Twitter by Elon Musk.

Wall Street’s Take

Following the results, BMO Capital analyst Daniel Salmon increased the price target on Twitter to $54 (9.96% upside potential) from $40 while reiterating a Hold rating on the stock.

The price target increase is based on the belief that the Twitter privatization deal will be completed as expected.

Salmon’s valuation is based on “21.9x 2023E EV/EBITDA and 5.5x 2023EEV/revenue, which compares with the peer group mean of 12.3x 2023E EV/EBITDA and 3.5x 2023E EV/revenue.”

Overall, the stock has a Hold consensus rating based on three Buys, 26 Holds, and two Sells. The average Twitter price target of $48 implies 1.63% upside potential from current levels.

Investors Weigh In

At the time of writing, TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on Twitter, with a whopping 23.8% of investors increasing their exposure to TWTR stock over the past 30 days.

Conclusion

The macroeconomic challenges have shaken all the global companies and have impacted advertising revenues as well as other revenues worldwide.

Twitter, however, managed to deliver an earnings beat in this difficult environment which is commendable. Investors are keeping a close watch on the progress of the privatization deal expected to close in FY2022.

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