Twitter Reports Q3 Results; Shares Jump 4% After-Hours

Social networking company Twitter, Inc. (TWTR) reported third-quarter revenue in line with expectations, driven by continued momentum across all products and geographies. Following the news, shares jumped 3.9% in the extended trading session on October 26.

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Revenue of $1.28 billion rose 37% year-over-year, in line with the consensus estimates. Advertising revenue, the largest contributor, came in at $1.14 billion, growing 41% compared to the year-ago period.

Additionally, Twitter’s Monetizable Daily Active Usage (mDAU) grew 13% year-over-year to 211 million, showing strength in the company’s product improvements and global conversations around current events. (See Insiders’ Hot Stocks on TipRanks)

Twitter posted a quarterly loss of $0.54 per share, while the Street expected a profit of $0.17 per share. In the prior-year period, Twitter reported a profit of $0.19 per share. The huge loss was driven by a one-time litigation settlement expense of $766 million.

Commenting on the results, Ned Segal, Twitter’s CFO said, “We continued to drive increased value for our advertisers thanks to revenue product innovation, including progress on our brand and direct response offerings, strong sales execution, and a broad increase in advertiser demand. These factors contributed to 41% year-over-year growth in ad revenue in Q3.”

For Q4, Twitter forecasts revenue to fall in the range of $1.5 – $1.6 billion compared to the consensus of $1.58 billion. The forecast includes revenue from MoPub, the sale of which is expected to close in Q1FY22.

Recently, Bank of America Securities analyst Justin Post lowered his price target on the stock to $82 (33.5% upside potential) from $90 while maintaining a Buy rating.

Post is encouraged by Twitter’s product innovations and believes that the company could outshine its peers due to strong exposure to advertising revenue from brands.

Overall, the stock has a Hold consensus rating based on 1 Buy, 4 Holds, and 2 Sells. The average Twitter price target of $65 implies 5.8% upside potential to current levels. Shares have gained 19.8% over the past year.