Amazon and Facebook have obvious revenue streams, but for a while there, Twitter seemed a little more obscure. They opened up to sponsored tweets in recent times, and they frequently engage individual users, pushing their paid advertising channel. But how successful are these efforts, and what do they mean for you as an investor? Is Twitter likely to join the FANG-club, and become a name to watch in
international share trading?
Analysts expected a hike of 14 cents per share in Twitter’s Q3 earnings, but Twitter upped that to 21 cents per share. Refinitv ran a speculative survey that proposed revenues of $702.6 million but again, Twitter overreached, coming in at $758 million. Twitter’s user base is well below Facebook, but the platform is taking measures to enhance active use. It was thought user numbers for Q3 would hit 330.1 million, but they fell behind at 326 million.
Trading tends to be cyclic, with cause-and-effect spilling over in surprising ways. Good earnings results boosted investor confidence, pushing up share value by 17%, though it had settled at a less reflexive 15.7% by close of trade. So far, Twitter’s value has been rising at about 29% year on year, and their advertising revenue is at $650 million. The main user complaint against Twitter has been rampant cyber-bullying, especially against marginalised groups based on race, gender, and identity.
Unhappy user base
CEO Jack Dorsey says his team is working hard “… to make Twitter a healthier and valuable everyday service.” He says every day, they see 2 million ‘fresh faces’ on Twitter. A third are new to the platform, while the other two-thirds have registered accounts, but haven’t logged on in the past thirty days. Jack and co. are constantly tweaking their system to turn these millions into daily users. Meanwhile, over at Amazon, the news is slightly less pleasing – share price dropped to $1,600, a 10% decline.
Amazon hadn’t taken such a big dip since January 2014, when it lost 11% of its share value. Mixed fortunes drove the dive. The company had been expected to offer $3.14 earnings per share, according to Refinitiv surveys. It beat this, reaching a respectable $5 EPS. Unfortunately, the big picture was less pocket-friendly. Overall earnings were expected to hit $57.1 billion, but they fell short at $56.6 billion. Of that figure, Amazon Web Services (AWS) earned $6.68 billion, which is below Factset’s projected expectations of $6.71 billion.
Like Twitter, Amazon’s revenue went up by 29% this year, combining a 35% increase in US sales and a 13% rise in global sales. AWS alone had a 46% hike in sales volumes, and Amazon mentions their salary upgrades as a factor in their earnings shift. They’re hoping Q4 will be better. It’s their busiest time of the year, thanks to holiday shopping. In terms of advertising revenue, that raised $2.5 billion, a curious statistic that amounts to 123%. Profits (as defined by net income) was $2.8 billion, ten times more than last year. Looking at the whole year in review, Amazon stock value is up by about 49%, and as CEO Jeff Bezos says, they have “ … reached $10 billion in annual sales run rate…” and are serving millions of customers.