Twitter Stock Price Up 18% As Q3 Profits Beat Predictions
For Twitter (NYSE: TWTR) investors, one week cannot go past without some news relating to the company hitting the headlines. Sometimes, this news is welcomed, for example when the company beats analyst predictions.. or even when the company drops millions of users all at once. For Twitter, both of these headlines have been apparent this week. The good news for investors is that the Twitter stock price made huge gains.
Twitter’s Q3 profits and overall revenue has outperformed analyst forecasts. The increased profits can be attributed to an increase in advertising sales. This news has sent Twitter stock price soaring, as the company is up this week. By Thursday morning, Twitter stock price was up by a whopping 18% in New York. For investors, this Q3 result is great news, considering the company did not perform nearly as well in Q2. In Q2, the number of people using Twitter at least once a month fell significantly, causing the Twitter share price to drop.
Twitter stock was the highest performer on the S&P 500 on Thursday due to its price hike. 24 hours later and Twitter stock price is still on the rise. Another reason for the stock price gains in the past few hours is due to an upgrade Twitter stock just received, thanks to its impressive earnings report.
In Q3, Twitter’s monthly active users dropped to 326 million from 335 million in Q2. This was below the analyst forecast of 330 million users set by FactSet. This underperformance on the user-activity side of things was not enough to drop the Twitter share price.
Twitter Stock Price Analysis
Twitter reported an income of $789 million, $1.02 a share for Q3. Earnings per share hit 21 cents, outperforming Wall Street predictions of 14 cents.
Twitter Q3 revenue, profit and earnings per share for 2017 compared to 2018:
|Twitter Inc – Q3||2017||2018|
|Revenue||$590 million||$789 million|
|Profit||-$21 million||$106 million|
|Earnings Per Share||10 cents||21 cents|
- Barclays – “Srong U.S. ad growth overshadows the user decline”
- Deutsche Bank – “Int’l ad revenue growth remains solid +26% y/y while US ad revenue acceleration to +32% y/y shows a healthier more broad-based momentum into 4Q,
- Pivotal Research – “Overall, the results represented another quarter with ongoing progress which was consistent with our longer-term expectations for Twitter as a durable, if niche-y (but highly differentiated), platform for digital advertising,”
Oppenheimer analyst, Jason Helfstein, upgraded Twitter stock from Perform to Outperform. He also set a price target of $37. Helfstein said this when upgrading Twitter;
“Within the scope of social media, we believe TWTR shares offer reasonable value with reduced execution risk. Q3 revenue and profit nicely exceeded expectations, with Q4 revenue in-line and margin guidance ahead,”
Jason Helfstein, Oppenheimer
Twitter stock is trading at 24 times earnings, which is expected, if anything it represents an undervaluation. Especially when the average S&P 500 equity is selling just below 22 times earnings.
Before you rush off to buy Twitter stock, there are some things to keep in mind. Twitter’s cash flow statement is showing that the quality of Twitters earnings may be declining. Twitter’s Q3 earnings show that the company had a rapid decline in cash production, due to increased capital spending.
Twitter Stock Price Analysis
Twitter stock price is forecasted to see highs of $48.00 in the next 12 months by our analysts. Lows on the next 12 months are predicted to be $21.00
Our analyst currently gives Twitter stock a “HOLD” rating.
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