“While Twitter Inc TWTR's move into live streaming events is one way the platform can introduce new users to its features, we think that conversion of existing users remains minimal and the service is still too complicated to attract the average Internet user, despite multiple changes,” Wedbush’s Michael Pachter said in a note.
The analyst maintains a Neutral rating on the company, with a price target of $14.
Q4 Expectations
Twitter is scheduled to report its fourth-quarter of 2016 results before market open Thursday. Pachter expects the company to report its Q4 results at or above the high end of the guidance range and the consensus expectations, driven by the U.S. presidential elections, as well as live event streaming and video.
“Our estimates are for revenue of $750 million, adjusted EBITDA of $185 million, and non-GAAP EPS of $0.13, versus the consensus estimates of $740 million, $182 million, and $0.12, and implied guidance for revenue of $688 million–788 million and for adjusted EBITDA of $164 million–179 million,” the analyst reported.
User Growth
Pachter expects year-on-year growth of 6 percent, below the Q3 level of 8 percent, and meaningfully lower than the levels seen in each quarter of 2015. The estimates reflect 5 percent year-on-year user growth.
The analyst stated that that there is “ongoing reluctance by advertisers to allocate a heightened portion of ad spend as Twitter’s CPE (cost per engagement) remains high relative to others,” while the user experience remains complicated.
The sequential monthly active user growth is estimated at 1.5 percent in the United States, with a 0.8 percent increase internationally.
“If Twitter demonstrates higher q-o-q MAU growth in the U.S., we expect politics to be the primary catalyst, though management may choose not to describe it as such,” Pachter added.
In Monday's pre-market session, shares of Twitter were down 0.4 percent at $17.54.
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