Twitter (TWTR) Stock: Releases Surprisingly Positive Earnings Report

Twitter Inc (NYSE: TWTR)

Twitter is having a relatively strong day in the market today, especially when you compare it to recent performance. That’s because the company reported its financial results for the third quarter, beating expectations on all fronts. Also, the company confirmed rumors of layoffs. Today, we’ll talk about the news, what we saw from the stock, and what we can expect to see from TWTR ahead.

TWTR Reports Surprisingly Strong Earnings

As mentioned above, Twitter is having a relatively strong day in the market today after reporting surprisingly positive financial results. The results for the third quarter were reported as follows…

  • Earnings Per Share – In terms of earnings per share, TWTR did overwhelmingly well. During the third quarter, analysts expected that the company would generate earnings in the amount of $0.09 per share. However, the company actually reported earnings in the amount of $0.13 per share; blowing away expectations.
  • Revenue – Revenue also proved to be a strong point for TWTR. During the third quarter, analysts expected that the company would generate revenue in the amount of $605.5 million. However, the company actually reported revenue in the amount of $616 million. Not only did this figure beat analyst estimates, it showed a strong 8.3% year over year growth rate.
  • Guidance – Twitter is expecting that for the full 2016 year, it will report earnings ranging from $700 to $715 million on margins of between 27.5 and 28 percent.
  • Users – In terms of users, TWTR is still seeing modest growth. In the quarter 317 million users were added. That’s up 3% year over year and up 1.3% quarter over quarter.

Twitter Confirms Layoffs

Recently, there has been quite a bit of chatter that TWTR was planning on laying off employees. That chatter was confirmed today. The company said it would be laying off about 9% of its workforce in a restructuring plan. The plan is designed to drive costs down while increasing efficiency within the company.

How The Stock Reacted To The News

As investors, one of the most important lessons we learn is to make ourselves available during trading season. After all, these reports move the market, and for Twitter, this was a much needed, positive report. As a result, we’re seeing growth in the value of the stock. Currently (11:28), TWTR is trading at $17.47 per share after a gain of $0.18 per share or 1.04%.

What We Can Expect To See Moving Forward

Moving forward, my opinion on TWTR is becoming relatively mixed. In the past, I didn’t think that the company would ever get the user growth issue under control. Now, don’t get me wrong, the company still has a ton of work to do, but 3% year over year is far better than 1% year over year. With that said, it finally seems like something the company is doing is working. Nonetheless, there’s still a long, uphill climb for Twitter. While user growth is moving upward slowly, it’s nowhere near what it needs to be. As a result, many are calling TWTR a successful movement but a failed business model. These types of comments and concerns will likely lead to more downward movement in the short and mid-term. At the end of the day, the long term view is a toss up. It all depends on how the company structures its user growth plans and how successful they are in that respect.

What Do You Think?

Where do you think TWTR is headed moving forward? Join the discussion in the comments below!