Twitter Gets Trampled Despite Trump

Twitter Inc TWTR reported its Q4 results below expectations, while Q1 guidance was also disappointing.

RBC Capital’s Mark Mahaney reiterated an Underperform rating on the company, while lowering the price target from $14 to $12.

“Not Trumped”

Mentioning that “Trump Tweets appear to have had 0 impact,” the analyst stated that Twitter posted revenue of $717 million for Q4, well below the consensus expectations, with ad revenue of $638 million, which also missed the estimate.

The company’s revenue appears to be deteriorating sharply, with 1 percent year-on-year growth during the quarter.

The adjusted EBITDA, however, came in at $215 million, beating the consensus forecast of $180 million.

Looking Ahead

For Q1, Twitter guided to revenue of $429-$559 million, about 21 percent below consensus, with the EBITDA guidance at $75-$95 million, which was 55 percent below consensus.

Mahaney noted the company was undergoing meaningful restructuring, while also seeing increased competition for ad dollars.

“We remain cautious on TWTR’s ability to show meaningful user growth in the n-t, but mgmt sounded confident re: product & marketing improvements. Positively, DAUs (Daily Active Users) grew an accelerating 11 percent Y/Y,” the analyst said.

“On the positive side, we see enhancements like Alerts and Newsfeed Curation driving increased engagement among existing users,” Mahaney pointed out, adding Twitter was demonstrating an ability to control costs.

However, on the negative side, there has been no meaningful new user growth, while ad monetization appears to be increasingly challenged due to competitive pressures.