Twitter Inc. (NYSE: TWTR) is on tap to post Q3 results after Monday's closing bell - which means Twitter stock will be on the move after-hours.
The global platform for public self-expression and real-time conversation is expected to post earnings per share (EPS) of $0.01, according to FactSet. Whisper numbers are for EPS of $0.03.
Wall Street's forecast for revenue is $351 million. That's handily above guidance provided by Twitter itself. The San Francisco, Calif.-headquartered company said last quarter it expects revenue for Q3 to come in between $330 and $340 million.
Here's what's behind these bullish expectations - and what an earnings beat could do for Twitter stock...
Wall Street Looks to Strong Growth in Twitter's Revenue and User Base
Analysts' robust projections come on the heels of strong Q2 results, in which Twitter posted revenue of $312 million, comfortably above forecasts of $282 million.
Revenue and increased monetization of ads are indeed key.
Twitter earns close to 90% of its revenue from advertising. The micro-messaging social media site offers a number of revenue-generating services, such as promoted accounts, promoted tweets, and promoted trends.
Twitter also allows advertisers to target their ads based on its vast informational database. Twitter's massive store of user information, including interests, locations, keywords, and geographic location, assists marketers in zeroing in on key users.
Also key is growth in user numbers.
MKM Partners believes Twitter added 18 million monthly average users (MAUs) during the quarter. But the firm noted that anything between 14 million and 17 million new MAUs would be in line with consensus expectations.
In addition to revenue and MAUs, investors seek an update on what Twitter's been up to and any future plans for growth.
Twitter's Busy Third Quarter
In late July, Twitter acquired Mitro, a small New York City-based password security startup. Financial terms were not disclosed. Founded by former Google engineers, Mitro has created a way that multiple people can share control of passwords to a single account.
The Mitro password manager for individuals and groups records user names and passwords as users log in to new sites, synchronizes them across devices, and lets users share them with others. It has extensions for Chrome, Firefox, and Safari; mobile apps for iOS and Android; and a server to do the synchronization.
Mitro also helps Twitter by strengthening its geolocation technology, which could help smaller advertisers better target local consumers.
But that's not all Twitter's been up to...
Last week at Flight, a special conference for developers, Twitter launched its new mobile platform called Fabric. Fabric is a suite of tools that includes mobile analytics, allowing apps to hook themselves into Twitter's mobile advertising network MoPub, and a social login-feature called Digits, which uses a phone number instead of a password.
In short, Mitro and Fabric are Twitter's attempt to reinvent itself as a mobile services company.
Twitter Vice President of Revenue Products Kevin Weil is confident Fabric will expand the company's footprint.
Speaking at the Flight conference, Weil said, "It's Twitter becoming a mobile services company - a company that provides services to mobile developers to power every mobile application on every major platform. It's a new stage for the company."
Fabric pits the social media company against some heavyweight competitors like Amazon.com Inc. (Nasdaq: AMZN), Google Inc. (Nasdaq: GOOG, GOOGL), and Facebook Inc. (Nasdaq: FB).
Some analysts remain divided on Twitter - here's why...
What Analysts Are Saying About Twitter Stock
Earlier this month, JP Morgan upgraded Twitter from "Neutral" to "Overweight" and raised its price target to $64 from $54.
The upgrade came amid increased confidence that Twitter, a primary beneficiary of the explosive shift to mobile advertising, will continue to grow not only its user base, but also its user engagement. JP Morgan believes this will be done through the combination of its onboarding efforts, rich content, and content organization.
JPM notes Twitter is still experimenting with different organizations of content, while also trying to monetize its logged-out users. Ads "have been more positive," and the micro-blogging platform is in the early stages of direct-response advertising, as well as video or rich media, mobile app install ads, international advertising, and self-serve, the firm said.
A number of firms are bullish on Twitter.
Nomura Securities recently reaffirmed its "Buy" rating on the stock. Topeka Capital Markets also has a "Buy" rating on Twitter with a price target of $63.00. And Evercore Partners, too, rates Twitter stock a "Buy" with a $65 price target.
A handful of analysts, however, remain guarded on Twitter. Some say the company's healthy Q2 was attributed to increased engagement and user activity of Twitter's social media platform because of the FIFA World Cup. They don't believe Twitter will be able to turn in a similarly vigorous performance in Q3
Susquehanna recently reiterated its "Neutral" rating on Twitter with a $47 price target. Citigroup, meanwhile, initiated coverage of Twitter on Oct. 22 with a "Neutral" rating and $53 price target.
Just before noon Monday, shares of Twitter were little changed at $49.76. Year to date, Twitter stock is down 22.23%.
Don't Miss Today's Top Story: On the heels of the worst market volatility in nearly 20 years, many investors are asking: "Should I be in the stock market right now?" Here's the definitive answer...
Related Articles:
- MarketWatch: Twitter Earnings to Take Center Stage in After Hours
- ValueWalk: Citigroup Analysts Have Initiated Coverage on Twitter Shares, Giving It a Neutral Rating Along with a Price Target of $53