Twitter Inc (TWTR)

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Where Twitter Stock May Find Support After Earnings Plunge
By: TheStreet | February 7, 2019

Twitter stock is taking a bath on Thursday, falling more than 9% despite beating on fourth-quarter earnings.

Shares of Twitter (TWTR - Get Report) are getting hammered on Thursday, down 9.84% at $30.80 after the company reported quarterly results that disappointed Wall Street.

The social media company reported fourth-quarter GAAP earnings of 33 cents per share, more than double consensus expectations of 15 cents per share. Revenue of $909 million grew more than 24% year-over-year and beat expectations by $42 million.

So what's hurting Twitter?

Monthly average user (MAU) growth sure isn't helping. For the quarter, Twitter had 321 million MAUs, down from 326 million last quarter and down from 340 million MAUs in the same period a year ago. Both international and U.S. MAUs were under pressure in the fourth quarter compared to the third quarter and Q4 2017.

Although MAU growth is poor, daily active user (DAU) growth is positive, as is monetizable DAU (mDAU). In the fourth quarter, mDAUs of 126 million grew from last quarter's 124 million and from 115 million in the fourth quarter of 2017. However, as we saw with Apple (AAPL - Get Report) two quarters ago, investors are not pleased that Twitter management is opting to only share mDAU data and not MAU data going forward. That's less transparency, not more, and investors don't like when there's less clarity.

Management may feel that removing this optic is reasonable if they feel that mDAUs are a more important measure of the business. Still, investors don't like the move and that's one reason they're punishing the stock. The other is guidance, as management expects first-quarter revenue of $715 million to $775 million. The midpoint -- $745 million -- falls below the $762.4 million consensus expectations.

For CEO Jack Dorsey's part, he sounds rather upbeat on the upcoming year:

"2018 is proof that our long-term strategy is working. Our efforts to improve health have delivered important results, and new product features, like a single switch to move between latest and most relevant Tweets, have been embraced by the people who use Twitter."

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