Twitter (TWTR) Stock: Don't Get Too Excited About Earnings

Twitter Inc (NYSE: TWTR)

Twitter has been having an incredibly hard time in the market over the past year or so, and if you ask me, the hard time is going to get even harder relatively soon. In fact, the company is reporting its earnings for the most recent quarter today after the closing bell. Regardless of the profits and revenue that are produced, chances are that TWTR is going to take a dive. Today, we’ll talk about why revenue and profits really don’t matter this go around, what we can expect to see from the report, and what we can expect to see from the stock moving forward.

Why Profit And Revenue Won’t Matter Much For TWTR This Time

In most cases, when it comes to earnings reports, investors are looking for profit and revenue growth. However, in this particular case, investors probably won’t care much, even if Twitter does report revenue and earnings ahead of expectations. When it comes to this earnings report, all eyes will be on users. For quite some time now, TWTR has been struggling with user data. For some reason, the company simply can’t seem to drive new users in and maintain them as active users on their network.

The user problem hit a peak early on in the year 2015. Because the company simply couldn’t seem to get things under control, investors pushed for the resignation of the CEO at the time, Dick Costolo. Once Costolo resigned, Jack Dorsey took his place. At the time, investors cheered as they expected that Dorsey would be able to get the user growth problem under control. However, that hasn’t been the case quite yet.

At this point, investors know that without new users coming in, TWTR will eventually reach a flat point with regard to revenue and earnings growth. As a result, even if Revenue and earnings are solid this quarter, if users aren’t up, chances are that the stock is going to decline in a big way.

What I’m Expecting To See From The Report

While I would love to say that I’m expecting nothing but positivity out of today’s earnings report, that simply isn’t the truth. When it comes to earnings and revenue, I am expecting to see growth. After all, Twitter has been focused heavily on improving conditions for advertisers on their network. So, it only makes sense that more advertisers are going to prove to be more active on the network. However, as mentioned above, I don’t believe that this will matter much. The truth is, I’m not expecting to see much positivity when it comes to user data. The reality is that TWTR has spent quite a bit of time on advertisers, but has left users on the back burner. Unfortunately, this is likely to lead to poor user growth once again, upsetting investors and leading to declines on the stock.

What We Can Expect From TWTR Moving Forward

Moving forward, I don’t have very high hopes for Twitter or its stock. The bottom line is that the company’s focus is in the wrong place. While management knows that it needs to do something to get user growth up, it seems to lack focus, desire, and planning to actually do something about the problem. Unfortunately, I believe that this problem is going to remain persistent for quite some time. Until the management at TWTR decides to actually come up with a plan to bring users in, buying this stock is like buying the Golden Gate Bridge, sure it may look pretty, but there’s absolutely no value in it!

What Do You Think?

Where do you think TWTR is headed moving forward? Let us know your opinion in the comments below!