Has TWTR Stock Bottomed?
Twitter Inc (NYSE:TWTR) stock disappointed investors again last week after reporting its financial results, which showed a slowdown in user growth. Twitter’s monthly active users (MAUs) grew by just three percent in the second quarter, from 310 million to 313 million.
As a result, Twitter stock has lost 11% in value over the past five days and 29% year-to-date. TWTR stock closed at $16.42 per share, down 1.32%, on Tuesday, August 2.
Some market observers believe that Twitter is no longer a good investment because of its failure to boost its userbase at a faster rate. They also noted that the company is experiencing difficulty in retaining its top executives. Natalie Kerris, the vice president of communications for the company, decided to leave just six months after joining Twitter in February.
Twitter’s Financial Results Shows Promise
Twitter’s second-quarter financial results weren’t really bad. In fact, they showed promise that the company is growing slowly but surely. The company added three million users, which is still a significant number. Its revenue increased 20% to $602 million, and adjusted earnings were $93.0 million, or $0.13 per share, for the second quarter.
Wall Street analysts expected Twitter to report adjusted earnings of $0.09 per share on $607 million in revenue, based on data compiled by Bloomberg.
Twitter’s advertising revenue rose 18% to $535 million. Its data licensing and other revenue climbed 35% to $67.0 million year-over-year. According to the company, its mobile revenue accounted for 89% of its total revenue. The company’s revenue in the United States increased 12%, while international revenue rose 33%. (Source: “Twitter Posts Second Quarter Results of $602 Million in Revenue,” Twitter Inc, July 26, 2016.)
These numbers show that Twitter stock is benefiting from its turnaround efforts. In fact, Twitter CEO Jack Dorsey expressed confidence in the company’s product roadmap. Dorsey noted, “We are seeing the direct benefit of our recent product changes in increased engagement and usage.” The company’s total ad engagement increased an outstanding 226% year-over-year. (Source: Ibid.)
Likewise, Twitter’s CFO, Anthony Noto, strongly believes the company “can drive sustained engagement and audience growth over time.” (Source: Ibid.)
Live Streaming Deals Could Boost TWTR Stock
Twitter has been focused on executing its long-term strategy and priorities, with live streaming being one of its major focus points this year.
Twitter recently secured live streaming deals with Major League Baseball (MLB), the National Hockey League (NHL), and the National Basketball Association (NBA). The company also inked a partnership agreement with Warner Bros. Pictures and Buzzfeed Motion Pictures to live stream the red carpet premiere of Suicide Squad.
These deals have strengthened Twitter’s competitiveness to attract more advertisers and its ability to increase its revenue and profits in the future. Live streaming sports, breaking news, and other important events could also encourage more people to use Twitter and spend more time on its platform.
The Bottom Line on TWTR Stock
Long-term investors remain bullish on TWTR stock because they’re looking at the big picture. They believe the company has great potential to generate huge profits as long as its management continues to drive the company in the right direction. The company’s progress may be slow, but it will eventually achieve a successful turnaround.