Is the bar set too low for Twit­ter’s earn­ings?

Financial Mirror (Cyprus) - - FRONT PAGE -

Twit­ter, Inc. (NYSE: TWTR) was sched­uled to re­port its sec­ond-quar­ter fi­nan­cial re­sults on Tues­day. The con­sen­sus es­ti­mates from Thom­son Reuters call for $0.04 in earn­ings per share (EPS) on $481.13 mln in rev­enues. In the same pe­riod of the pre­vi­ous year, the so­cial media com­pany posted EPS of $0.02 and $312.17 mln in rev­enue.

Just look­ing at where the stock is right now, it is hov­er­ing just above its 52-week lows. So far year to date shares are down 1.3% and even down 8.5% in the last 52weeks. It’s very pos­si­ble that an­a­lysts may have taken an overly neg­a­tive tone on the es­ti­mates ahead of earn­ings con­sid­er­ing these lows. Need­less to say it would ap­pear that the bar is set in­cred­i­bly low.

Given the pur­pose of so­cial media to net­work, con­nect and share in­for­ma­tion, Twit­ter must stay on the cut­ting edge of these trends, con­tin­u­ally im­prov­ing its users’ ex­pe­ri­ence as well as its own net­work. Through a re­cent part­ner­ship with Google Inc., Twit­ter has suc­ceeded in do­ing both, ac­cord­ing to a key an­a­lyst.

Canac­cord Ge­nu­ity thinks Twit­ter has done well in ex­e­cut­ing on the ini­tia­tives set out dur­ing its an­a­lyst day back in Novem­ber. How­ever lit­tle trac­tion has ac­tu­ally been made on the user front. The bro­ker­age firm thinks there could be a lag be­tween prod­uct roll-outs and monthly ac­tive user (MAU) growth.

How­ever the Google in­te­gra­tion may have a siz­able im­pact. Google at­tracts the most traf­fic of any prop­erty glob­ally on desk­top and mo­bile, and visi­tors specif­i­cally to its U.S. mo­bile search prop­erty rep­re­sent an op­por­tu­nity to ex­pose 100 mln monthly users to Twit­ter con­tent.

Only a few weeks into the part­ner­ship, a pro­pri­etary sur­vey from Canac­cord Ge­nu­ity has shown that real-time tweets al­ready show up in 54% of the Google search queries sam­pled. Twit­ter yet again proves its le­git­i­macy as a live news plat­form, as 90% of news-re­lated searches sur­face tweets.

Ul­ti­mately, Canac­cord Ge­nu­ity be­lieves that this is just the be­gin­ning for the Twit­ter/Google in­te­gra­tion. Rolling out to desk­top and in­ter­na­tional could sig­nif­i­cantly in­crease the reach and the per­for­mance of these tweets.

The firm es­ti­mates the in­te­gra­tion cur­rently could add about 3.5 mln ad­di­tional visi­tors to Twit­ter from Google with this first it­er­a­tion. This i mpact could po­ten­tially ex­pand to greater than 40 mln over time.

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