Reports results Q4 2018 on Thursday 7 February, before the market opens
Revenue forecast: $ 869.5 million
EPS expectation: $ 0.25
With the risk that government rules on user privacy threaten to hamper the growth trajectory of social media shares, it is becoming increasingly difficult to choose a potential winner from this group. There is no doubt that regulatory measures will make it much more difficult for players in the sector such as Facebook (NASDAQ 🙂 (NASDAQ: FB), Google (NASDAQ 🙂 (NASDAQ: GOOGL) and even LinkedIn (NYSE 🙂 (NYSE: LNKD). ) to generate income with user data.
One way to make a better investment decision in this very unstable situation is to focus on those companies that have written trolls and malicious content on their site beforehand and quickly about removing spam from their platform while your ad dollars will win at the same time.
Twitter-week chart
TWTR-weekly 2016-2019
Twitter is emerging as the winner on both fronts. The San Francisco-based company has created its own momentum within the very negative environment for social media shares of the past year. Equities gained 33% over the past 12 months, a period when Facebook fell 5% and the NASDAQ benchmark was only 6%.
Massive clearance, video material started
By taking quick action to clean up its platform, Twitter convinced investors that they should ignore user relationship numbers, while making the company more acceptable to regulators. During the quarter that ended in September, the monthly active users of Twitter were on average 326 million. That is a decrease of 9 million compared to the second quarter. Twitter warned in its July income report that the critical measurement value has dropped further as a result of attempts to get rid of questionable users and to comply with stricter privacy rules in Europe
In our opinion, Twitter plays smart. In the current environment supervision by supervisors will only increase if the problems with data breaches continue to occur throughout the sector
Twitter has provided investors with transparency by adopting an open approach to problems within its network. CEO Jack Dorsey has warned investors since last summer that his platform will not see user growth while the company is doing its gigantic cleanup action
But while the aggressive clean-up exercise continues, Twitter has successfully squeezed more revenue from advertisers, even though the growth of users has decreased over the past two quarters
As underlined in our previous post about Twitter, the company's success in attracting advertising dollars is largely due to the pressure to expand video content. That resonates very well with advertisers. We believe that this strategy, which is one of the key components of Dorlows' cover plan, will continue to strengthen Twitter's appeal. The video segment now accounts for more than half of Twitter's advertising revenue.
Twitter's real-time highlights and video partnerships have positioned the company as a broadcasting and communications network, complementing all other forms of media, including TV. Twitter is also well positioned to take advantage of the big shift in dollars to mobile and native advertising.
Bottom Line
With significant progress in improving content quality and advertisers' willingness to appreciate the transparency and power of the platform, we believe that Twitter will attract even more user engagement in the future. The decrease in the number of users will stop at a certain moment this year.
These two factors will help the Twitter stock, which closed at $ 34.37 yesterday and continue its upward trajectory. We remain optimistic about the long-term prospects.
