Twitter: Analysts Downgrade Following Management Guidance

Twitter Inc (NYSE: TWTR) opened up down 13%, hitting a 3 month low after its first-quarter results indicated that user growth fell below analyst expectations, while barely beating analysts estimates. The company announced first-quarter revenue of $1.036 billion and a gross margin of 63.2%. Net income came in at $68 million, or a 6.6% net margin, and earnings per share hit only $0.08.

A number of analysts decreased their price targets off the back of the earnings, bringing their average 12-month price target down from $70.76 to $67.88 from a total of 40 analysts who cover the name.

Below are the most recent analyst changes as of the time writing:

  • Baird cuts target price to $75 from $81
  • Piper Sandler cuts target price to $66 from $71
  • Jefferies cuts target price to $62 from $76
  • Cowen and Company cuts target price to $54 from $68
  • JP Morgan cuts target price to $80 from $91
  • Atlantic Equities cuts target price to $63 from $70
  • Guggenheim cuts target price to $70 from $75
  • Mizuho cuts target price to $65 from $67
  • Truist Securities cuts target price to $70 from $74
  • Wedbush cuts target price to $64 from $75
  • Rosenblatt Securities cuts target price to $60 from $65
  • Deutsche Bank cuts target price to $67 from $76
  • Stifel cuts target price to $60 from $70
  • Oppenheimer cuts target price to $70 from $85
  • UBS cuts target price to $62 from $68

In Canaccord’s note to investors Friday morning, their analyst Maria Ripps lowered their 12-month price target to $68 from $82 and reiterated their hold rating on Twitter. Ripps says that the user and ad growth in Q1 was tempered by Q2 guidance, with US user growth coming in below Canaccord and consensus estimates, while international user growth came in above their estimates.

Ripps says the revenue and operating income beat came primarily from strong brand advertising specifically in March. Advertising revenue grew 32% year over year to $900 million. MAP revenue also accelerated in the first quarter due to the “increased spend from contemporary verticals like crypto, investing, and sports betting, with management noting advertisers in those areas increased their spend by ~10x vs. 1Q20.”

Meanwhile mDAU grew 20% year over year to 199 million users, or +7 million users from last quarter, which was slightly below or generally in line with expectations depending on who you ask. Twitter has been improving the personalization and discovery of ongoing events. Twitter grew its Topics from 6k to 7k quarter over quarter while also adding Twitter Spaces to select Android users, they also acquired an online newsletter publisher named Revue.

With management guidance of $0.9 – $1.08 billion in revenue for the second quarter, guidance is slightly below what analysts were expecting but represents a 43% – 58% year over year revenue growth. Management notes that this guidance could be tweaked if brand strength continues to blow over into the second quarter.

Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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