Social Networks Pop Ahead of Twitter's Earnings Report

Facebook and Twitter are up big today, but the exuberance could dry up if Twitter's earnings results don't meet or exceed expectations.

Apr 29, 2014 at 3:30PM

U.S. stock markets moved higher today as strong earnings helped lift investors' moods. According to the Conference Board, consumer confidence also remained high at 82.3 in April, indicating that consumers remain optimistic about the direction of the economy.  

The Dow Jones Industrial Average (DJINDICES:^DJI) was up 102 points, or 0.62%, late in trading on widespread gains among its 30 member companies.

Social media front and center
Two of the biggest winners on the market today are Facebook (NASDAQ:FB) and Twitter (NYSE:TWTR), which respectively were up 3.5% and 6.9% There's growing understanding among investors that both companies are starting to generate the kind of revenue and profit their popularity allows.

Facebook's latest quarterly earnings results showed a 72% jump in revenue to $2.5 billion and a near-tripling of non-generally accepted accounting revenue to $882 million, or $0.34 per share.

FB Revenue (TTM) Chart

FB Revenue (TTM) data by YCharts.

The hope is that Twitter's results will show similar gains, if not more, given the social media company's popularity. Twitter is scheduled to report earnings after the market closes today, and Wall Street is expecting revenue of $241.5 million and a loss of $0.03 per share. If the company can exceed those expectations the stock could continue to grow beyond its $24 billion market cap.  

Fb Hq Image

Investors are loving Facebook's financing results recently. Source: Facebook.

Keep in mind that Twitter's revenue has grown more than sixfold, from $106 million in 2011 to $665 million in 2013. That torrid rate of growth may slow, but Twitter, along with Facebook, is redefining the way people interact and connect in the modern world. Advertisers and users will follow that kind of business, and as social networks mature they become "stickier," or harder to replace by new peers.

Of course, these are both highly valued stocks, so if Twitter misses its numbers the gains the stock grabbed today could vanish quickly. But that's the risk of a stock like Twitter or Facebook.

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Travis Hoium has no position in any stocks mentioned. The Motley Fool recommends Facebook and Twitter. The Motley Fool owns shares of Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

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That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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