Twitter
TWTR
is set to report first-quarter 2021 results on Apr 29.
For the first quarter of 2021, the company expects total revenues to be between $940 million and $1.04 billion. The Zacks Consensus Estimate for revenues stands at $1.02 billion, indicating growth of 26.8% from the year-ago quarter reported figure.
Meanwhile, the consensus mark for first-quarter earnings has remained steady at 14 cents per share over the past 30 days, indicating growth of 27.3% from the year-ago quarter.
Notably, the company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed once, the average negative surprise being 1649.1%.
Factors to Consider
Twitter’s ad revenues are expected to have slightly recovered in the first quarter, driven by upswing in advertiser sentiment for digital ads in general and for Twitter’s solutions in particular, and the resumption of more events and product launches.
The Zacks Consensus Estimate for advertising revenues is pegged at $888 million, indicating growth of 30.2% from the year-ago quarter’s reported figure.
Additionally, the company’s initiatives to add features and focus on tackling abuse issues are expected to have helped it expand the monetized user base in the to-be-reported quarter.
The company is considering allowing its users to receive tips, or digital payments from their followers, per
Reuters report
. Per the report, chief executive Jack Dorsey stated that the feature is expected to help the social media platform earn more money and engagement from its base of 192 million daily users.
In the fourth quarter of 2020, average monetizable DAU (mDAU) grew 27% year over year to 192 million, driven by global conversation around current events and ongoing product improvements.
Twitter’s improved ability to proactively identify and remove abusive content from the platform has been a notable development in this regard.
On Jan 25, Twitter announced the launch of a pilot program that has users flag tweets that they believe are misleading and write notes to provide context.
Moreover, the company opened free access to its new application programming interface (API) software for academic researchers during the first quarter, enabling them to study public conversations on its platform but did not provide data from suspended accounts as part of the product. This is expected to have boosted trustworthiness of the platform.
Further, steady demand for video ad products like Video Website Cards and in-stream pre-roll is likely to have contributed to the top line.
However, rising expenses due to an increase in investments are expected to have weighed on profit margins.
Key Developments in Q1
During the quarter, Twitter announced the acquisition of Breaker, a social broadcasting application. Consequently, the podcasting application’s services were shut down on Jan 15.
On Jan 28, 2021, Twitter announced the acquisition of a newsletter publishing startup, Revue. The Netherlands-based startup enables writers to create and publish editorial newsletters for free. Twitter has made Revue’s Pro features available for all the accounts for free. Further, the company has reduced the fee charged on paid newsletters to 5%.
What Our Model Says
According to the Zacks model, the combination of a positive
Earnings ESP
and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Twitter has an Earnings ESP of +0.42% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our
Earnings ESP Filter
.
Other Stocks to Consider
Here are a few other companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:
Atlassian Corporation PLC
TEAM
has an Earnings ESP of +24.48% and is Zacks #2 Ranked.
You can see
the complete list of today’s Zacks #1 Rank stocks here
.
CDW Corporation
CDW
has an Earnings ESP of +0.51% and a Zacks Rank #2.
Etsy, Inc.
ETSY
has an Earnings ESP of +1.19% and a Zacks Rank #3.
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