Twitter’s stock spiked up 20 percent on better than expected profits Thursday, but then fell back to a 10.89 percent gain in late trading as analysts questioned the quality of its earnings.
The company reported fourth quarter 2017 revenue of $732 million, EBITDA cash flow of $308 million, and 19 cents per share in profit. That was spectacularly above Wall Street analysts’ estimates of $686 million in revenue, $241 million in EBITDA cash flow, and a 5 cents profit, according to NASDAQ.
But as analysts delved into the details of Twitter’s earnings report, they found the company’s monthly-active-users (MAU), Wall Street’s top metric for engagement on social networking platforms, came in at 330 million, versus an expected 332.5 million.
Twitter’s year-over-year MAU growth was only up by 4 percent in 2017, versus a Wall Street’s estimate of 12 percent growth. Management, in their pre-opening conference call with analysts, blamed the huge MAU miss on an effort to purge so-called “fake accounts.” But that set off criticism that the MAU numbers analysts had relied upon in the past were fake.
Twitter has a grim reputation for disappointing shareholders. The company’s stock price peaked at $69 in Dec. 2013, and then plunged from number 3 to number 7 in social media popularity after Obama bundler Chris Sacca led a Twitter board of directors coup to fire popular CEO Dick Costolo in June 2015. Twitter then began a purge of conservatives that muzzled free speech and seemed to kill user growth.
Exactly one year ago, Breitbart Tech reported that Twitter’s stock had plunged by 10.95 percent after the company admitted that its monthly average users had fallen from 307 million to 305 million in 2016. The engagement decline seemed shocking, after Donald Trump’s insurgent presidential campaign demonstrated the Twitter platform could overwhelm the mainstream media’s liberal bias by going directly to voters.
Twitter then astonished analysts by claiming its pancaked social network platform’s growth may have been due to President Trump having what they called large positive and negative capacities. The stock price slumped to a near-record low of $15 on Feb. 9, 2017.
With the combination of the huge “Trump Bump” causing a 40 percent positive move in the overall stock market, and much better internal management control performance, Twitter’s $29.80 stock price represents almost a doubling over the last twelve months.
But with Chief Operating Officer Anthony Noto announcing last month that he is leaving Twitter in March to become CEO of the hot Social Finance, Inc. (SoFi) start-up, only three of the 36 analysts that provide research coverage on Twitter rate the stock as a “Buy,” while 10 analysts rate Twitter as “Underperform,” and one rates the stock as a “Sell.”
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