Insights

Elon Musk Aside, Twitter Investors Will Be Watching for User Growth

Twitter (NYSE: TWTR) is scheduled to report first-quarter 2022 financial results before the markets open on Thursday. On Monday, the board of directors accepted Elon Musk’s offer to acquire the company for $44 billion and while details of the planned acquisition will no doubt take center stage in the conference call following the earnings release, investors will also be looking at the social media site’s daily active user totals. 

Image source: Getty Images.

Twitter aims to attract 100 million additional daily active users 
As of the quarter ended Dec. 31, Twitter boasted 217 million daily monetizable active users. That was up from 192 million from a year prior. Twitter benefited from the pandemic’s onset when people spent more time at home and looked for ways to stay connected to people online. 
The rise in users and engagement helped boost revenue at its highest rate since 2015. After years of stagnating growth, Twitter increased revenue by 37% in 2021. Folks have spent more time on the platform since the pandemic’s onset and are sticking around even as economies reopen. 

TWTR Revenue (Annual) data by YCharts
Management expects revenue to grow by at least 20% in 2022. If revenue growth exceeds 20% in 2022, it would be the first time since 2014 and 2015 that the company achieved north of 20% growth in two consecutive years.
Rival Snap has already reported first-quarter results, which showed quarter-over-quarter user growth of 13 million. The figure puts pressure on Twitter to, at the very least, maintain user growth in the millions. Twitter has aspirations of reaching 315 million monetizable daily active users by 2023. That’s nearly 100 million higher than its most recent updated figure, so continued growth will be crucial. The company defines monetizable daily active users as “people, organizations, or other accounts who logged in or were otherwise authenticated and accessed Twitter on anygiven day through twitter.com, Twitter applications that are able to show ads, or paid Twitterproducts, including subscriptions.”
What analysts expect
Analysts on Wall Street expect Twitter to report revenue of $1.22 billion and earnings per share (EPS) of $0.03 for the quarter. If the company meets those projections, it would represent an increase of 19.2% and a decrease of 81.25%, respectively, from the same period the year before. The decrease in EPS should be no surprise to investors who have followed Twitter over the years. It has struggled to consistently deliver profits on the bottom line.

TWTR data by YCharts
Regardless, the stock has been up 33% in the last month, buoyed by Elon Musk’s offer to buy the company at $54.20 per share. As of this writing, shares were trading at $51.73. Even though the board of directors agreed to Musk’s offer, the deal must still be approved by regulators. It’s not a sure thing that regulators will approve the acquisition, so shareholders should still monitor the firm’s quarterly figures and financial prospects until the deal is finalized. 
Editor’s note: This article has been corrected. Twitter is scheduled to report before the markets open on Thursday. 
Parkev Tatevosian has no position in any of the stocks mentioned. The Motley Fool owns and recommends Twitter. The Motley Fool has a disclosure policy. –

Twitter (NYSE: TWTR) is scheduled to report first-quarter 2022 financial results before the markets open on Thursday. On Monday, the board of directors accepted Elon Musk’s offer to acquire the company for $44 billion and while details of the planned acquisition will no doubt take center stage in the conference call following the earnings release, investors will also be looking at the social media site’s daily active user totals. 

Image source: Getty Images.

Twitter aims to attract 100 million additional daily active users 

As of the quarter ended Dec. 31, Twitter boasted 217 million daily monetizable active users. That was up from 192 million from a year prior. Twitter benefited from the pandemic’s onset when people spent more time at home and looked for ways to stay connected to people online. 

The rise in users and engagement helped boost revenue at its highest rate since 2015. After years of stagnating growth, Twitter increased revenue by 37% in 2021. Folks have spent more time on the platform since the pandemic’s onset and are sticking around even as economies reopen. 

TWTR Revenue (Annual) data by YCharts

Management expects revenue to grow by at least 20% in 2022. If revenue growth exceeds 20% in 2022, it would be the first time since 2014 and 2015 that the company achieved north of 20% growth in two consecutive years.

Rival Snap has already reported first-quarter results, which showed quarter-over-quarter user growth of 13 million. The figure puts pressure on Twitter to, at the very least, maintain user growth in the millions. Twitter has aspirations of reaching 315 million monetizable daily active users by 2023. That’s nearly 100 million higher than its most recent updated figure, so continued growth will be crucial. The company defines monetizable daily active users as “people, organizations, or other accounts who logged in or were otherwise authenticated and accessed Twitter on any
given day through twitter.com, Twitter applications that are able to show ads, or paid Twitter
products, including subscriptions.”

What analysts expect

Analysts on Wall Street expect Twitter to report revenue of $1.22 billion and earnings per share (EPS) of $0.03 for the quarter. If the company meets those projections, it would represent an increase of 19.2% and a decrease of 81.25%, respectively, from the same period the year before. The decrease in EPS should be no surprise to investors who have followed Twitter over the years. It has struggled to consistently deliver profits on the bottom line.

TWTR data by YCharts

Regardless, the stock has been up 33% in the last month, buoyed by Elon Musk’s offer to buy the company at $54.20 per share. As of this writing, shares were trading at $51.73. Even though the board of directors agreed to Musk’s offer, the deal must still be approved by regulators. It’s not a sure thing that regulators will approve the acquisition, so shareholders should still monitor the firm’s quarterly figures and financial prospects until the deal is finalized. 

Editor’s note: This article has been corrected. Twitter is scheduled to report before the markets open on Thursday. 

Parkev Tatevosian has no position in any of the stocks mentioned. The Motley Fool owns and recommends Twitter. The Motley Fool has a disclosure policy.

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