Twitter Stock Has A Make Or Break Week Ahead

Twitter Stock (NYSE:TWTR) has fallen over 30 percent year to date and investors are beginning to panic. Rightfully so, considering the company has been the focus of negative media attention over the past two weeks due to the exit of four key executives, an impending earnings report, and rumors that it will change its homepage algorithm. Here's a closer look at how each of these events is impacting Twitter shares, and how analysts are responding.

Executives fleeing

On January 24, CEO Jack Dorsey announced that four executives had “chosen to leave” Twitter. The four ex-executives all played integral roles in Twitter's product, engineering, media, human resources departments. Media sources speculated that the executives were forced out by Dorsey in an effort to revamp the company, but Dorsey's tweet expressed nothing but goodwill for his parting teammates.

Twitter's COO Adam Bain and CTO Adam Messinger are taking on additional roles to fill the void in the interim, worrying investors that the company's ambitious turnaround efforts may take longer to put in to drive as the C-suite becomes overloaded. The company has not yet announced permanent replacements for the vacant positions, though the company has invested in a new diversity chief as it attempts to diversify its workforce.

Furthermore, investors worry that Dorsey may be stretched too thin as he continues to serve as CEO of both Twitter and Square (NYSE:SQ). Being at the helm of two publicly traded companies is no small feat, and critics are calling for him to resign from Square to focus all efforts on restoring Twitter to its former glory. For now, Dorsey is known for his tightly compartmentalized schedule, his mornings at Twitter and afternoons at Square. Thankfully, the headquarters for each are in the same San Francisco neighborhood.

Impending earnings

Twitter will post Q4 earnings on Wednesday after market close. Analysts estimate the giant will post revenue of $710 million and Non-GAAP EPS of $0.12. In the same quarter of last year, the company posted revenue of $479 million and Non-GAAP EPS of $0.12. For this quarter, Twitter guided revenue between $695 million to $710 million. Mark Mahaney of RBC Capital is expecting the company to post revenue of $713 million and Non-GAAP EPS of $0.13. The analyst reminds that “TWTR has exceeded its revenue guide 5/6 quarters,” and “the high end of revenue guidance implies 48% Y/Y growth, a deceleration vs. Q3's 58%.”

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