Twitter (TWTR) Plunges 12% After Missing on User Front and Guidance, Analysts Lower PTs But Stay Bullish LT

April 30, 2021 8:00 AM EDT
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Price: $50.11 -1.16%

Rating Summary:
    20 Buy, 36 Hold, 4 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 26 | Down: 9 | New: 37
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Shares of Twitter (NASDAQ: TWTR) are down over 12% in pre-open trading Friday after the social media company posted a mixed bag of results.

Twitter posted adjusted earnings per share (EPS) of $0.16 to beat the expected $0.14. While analysts were calling for sales of $1.03 billion, Twitter delivered $1.04 billion in revenue.

“Q1 was a solid start to the year with total revenue of $1.04 billion up 28% year over year, reflecting strength in brand advertising in March as well as accelerating year-over-year growth in Mobile App Promotion (MAP) revenue. Operating margin of 5% reflects ongoing investments across our top objectives,” the company said in a press release.

However, shares of the company plunged after TWTR said it has 199 million monetizable daily active users (DAUs) while the analysts were expecting a million more. The company expects revenue to come in a range between $980 million and $1.08 billion, with the midpoint of $1.03 billion missing on the $1.06 billion expected.

Twitter said its client base jumped 20% compared to last year while the total ad engagement climbed 11% during the same period.

Twitter CFO Ned Segal said TWTR’s strategy relies strongly on brand advertising and it usually has a slow start after the holiday season.

Following a disappointing guide and user numbers, Wall Street analysts at 4 firms moved to lower PTs on TWTR.

Oppenheimer analyst Jason Helfstein is one of the analysts who lowered the PT to $70.00 per share from $85.00 but maintaining an “Outperform” rating as he still likes the long-term story.

“We see TWTR well-positioned to benefit from reopening momentum related to live events and brand advertising rebound. While the market reacted to weaker 2Q outlook, following upbeat investor day, we are more upbeat on product cadence and expect Brand strength in 2H:21. Additionally, MAP direct response ad products seeing accelerated revenue, but still a small portion of overall revenues. Launched pilot program to use community policing of misleading posts in US. Longer-term, we believe mgmt. has the levers to drive monetization, including Topics, business profilesm and future subscription products,” Helfstein wrote in a note sent to clients.

Stifel analyst John Egbert is less bullish on TWTR as he reiterated a “Hold” rating on the stock and lowered the PT to $60.00 per share from $70.00 per share.

“Although DR contributions are building off of a small base and recent product launches are gradually improving Twitter's capabilities in these channels, investors may fear Twitter is steadily losing ground to its competitors as it waits for more tools to come to market. We maintain our Hold on TWTR shares as we see risk/reward as balanced at current price levels,” Egbert said in a memo.

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