Twitter share price surges on positive user-growth forecast and beating estimates

on Feb 6, 2015
Updated: Oct 21, 2019

Shares in Twitter Inc (NYSE:TWTR) surged during yesterday’s after-hours trading, after the microblogging company posted better-than-expected revenue for the final three months of the year and forecast that its user growth rate would pick up in the current quarter. In its financial report for the fourth quarter and fiscal year ended December 31, the company said that it had added 13 million to 16 million users in each of the first three quarters of 2014 and was on track to achieve a similar result in the first quarter of this year. The forecast made it easier for investors to shrug off the fact that Twitter added only about four million users in the fourth quarter.

Financial performance also helped. Twitter said that its Q4 revenue had increased 97 percent from a year earlier to $479 million. Analysts had been expecting revenue of $453.1 million. The company posted a net loss of $125 million in the fourth quarter, or 20 cents a share. However, excluding certain items, the company earned 12 cents a share, well ahead of the average analyst estimate of six cents a share.

Twitter’s revenue for the full year more than doubled from 2013 to $1.4 billion. The company posted non-GAAP profit of $101 million in 2014, compared with a $34-million loss in 2013.
“We closed out the year with our business advancing at a great pace,” commented Twitter’s chief executive officer Dick Costolo. “Revenue growth accelerated again for the full year, and we had record quarterly profits on an adjusted EBITDA basis.”

Looking ahead, the company expects to generate revenue of $440 million to $450 million in the first quarter, which compares to an average analyst estimate of $449.7 million. Full-year revenue is expected to be in the range of $2.3 billion to $2.35 billion.
Twitter was also in the news yesterday after technology website The Verge obtained a conversation held between CEO Dick Costolo and Twitter employees on an internal company forum in which he admitted that:
“We suck at dealing with abuse and trolls on the platform and we’ve sucked at it for years. There’s no excuse for it. I take full responsibility for not being more aggressive on this front. It’s nobody else’s fault but mine and it’s embarrassing.”
He followed up with a strong statement of intent, marking a seeming shift of policy from the Microblogging platform, which has until now relied on abusive accounts being reported by peers, towards a more active approach.
“We’re going to start kicking these people off right and left and making sure that when they issue their ridiculous attacks, nobody hears them.”
In yesterday’s after-hours trading, Twitter shares jumped just over nine percent to $45.00. The stock had closed up 1.3 percent at $41.26 in regular trading, extending its year-to-date advance to 15.1 percent.
According to the Financial Times, the 33 analysts offering 12 month price targets for Twitter have a median target of $49.00, with a high estimate of $64.00 and a low estimate of $28.00. As of Feb 02, 2015, the consensus forecast amongst 52 polled investment analysts covering Twitter has it that the company will outperform the market. The same consensus estimate has been maintained since December 17, when the sentiment of investment analysts improved from “hold”.
As of 09:35 GMT, Friday, 06 February, Twitter share price is $41.30.

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