Profitable Twitter Puts Stock on Track for Best Day Ever

Feb 09, 2018, 02:00
Profitable Twitter Puts Stock on Track for Best Day Ever

In the U.S. where there are 68 million users, advertising revenue has fallen 8 percent year-on-year to $406 million.

The year-over-year increase in revenues was impressive, given the continuous decline in revenues in the first three quarters of 2017. But Dorsey said at a conference late past year that it's "not about the amount of time I spend at one thing but how I spend the time and what we're focused on".

Profitability isn't the only good news for Twitter this quarter: its revenue also started growing again, rising to $732 million, up 2 percent from $717 million this time in 2016.

What can Twitter do to increase user trust? When people checked that list, they were technically checking Twitter and counted as an active Twitter user.

For Twitter, it's monthly active users did not grow from the third quarter, but it did grow 4% from a year ago. Breaking down the revenue, advertising was the biggest contribution here, to no surprise.

Overall ad engagements increased by 75%.

In a letter to shareholders, the company said it is seeing more engagement with advertisements because it is using more video and seeing higher click-through rates.

Video ads continue to be the key driver backed by strength in Video Website Cards, Video App Cards, In-Stream Sponsorships, and In-Stream Video Ads. Contrarius Investment Management Ltd now owns 5,624,420 shares of the social networking company's stock valued at $94,884,000 after buying an additional 71,372 shares during the last quarter. In the fourth quarter, the numbers held fairly steady.

Worldwide revenues - from outside the United States - were up 17pc to $326m. Twitter announced 300 million monthly active users, the same as last quarter. Adjusted EBITDA rose to Dollars 308 million from 215 million. The company has a market cap of $19,990.00, a price-to-earnings ratio of -52.76, a PEG ratio of 10.96 and a beta of 1.14.

Hitting its first ever profitable quarter is clearly notable news not just for Twitter but for Wall Street too, with the company's shares soaring more than 20 percent in pre-market trading.

As of Dec 31, 2017, cash and cash equivalents (short-term investments) were $4.4 billion compared with $4.3 billion at the end of Sep 30, 2017. Net cash provided by operating activities in the year amounted to United States dollars 831 million, an increase from 763 million year-on-year.

As for the outlook, Twitter said it expected adjusted EBITDA of $185 million and $205 million. For FY 2018, capex is seen increasing to Dollars 375-450 million. TTD, all sporting a Zacks Rank #1 (Strong Buy).

For many investors, the best hope is that Twitter will be acquired, but the stock's jump could make the company less attractive to potential suitors. Soon electric vehicles (EVs) may be cheaper than gas guzzlers.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

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