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These Metrics Could Move Twitter, Inc. Stock

By Daniel Sparks – Feb 10, 2016 at 10:00AM

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Ahead of Twitter's earnings release today, here's what to expect for some of the key metrics that could move the stock.

For Twitter (TWTR 0.43%) investors, the wait between the company's third- and fourth-quarter reports may seem longer than usual. The stock has fallen about 48% during these three months, making for a brutal holding period for investors. Indeed, Twitter shares are now trading at an all-time low and 46% below the stock's IPO price of $26. But could the the stock price finally begin to rebound when the social network reports results this afternoon?

Twitter headquarters. Photo: Tim Trueman. Image source: Twitter.

Ahead of the report, here are the key metrics investors will be watching.

Revenue: On average, analysts are expecting Twitter to report fourth-quarter revenue of $710 million -- up 48% compared to the year-ago quarter. These expectations are at the high end of the company's guidance for the quarter for revenue of $695 million to $710 million.

EPS: The consensus analyst estimate for Twitter's non-GAAP EPS for Q4 is $0.12, which is the same as its non-GAAP EPS in the year-ago quarter.

Advertising revenue growth: Twitter's advertising revenue in its most recently reported quarter was up 60% from the year-ago quarter. While a deceleration in year-over-year growth in this important metric is likely, investors should look for the company to report growth close to this level -- perhaps about 50% or greater -- in Q4.

Users: During Twitter's third quarter, monthly active users hit 320 million. This was up 11% compared to the year-ago quarter and just 1% sequentially.

User growth will likely get special attention when results are reported, as CEO Jack Dorsey has acknowledged that its user growth is a problem.

"Our Q2 results show good progress in monetization, but we are not satisfied with our growth in audience," said Dorsey in the company's second-quarter press release shortly after he was elected interim CEO and before he was appointed permanent CEO.

Investors are likely expecting Twitter to maintain or improve its sequential growth in monthly active users reported in Q3. To maintain this growth, it will need to report 324 million monthly active users or more.

Guidance: The consensus analyst estimate for first-quarter and full-year revenue is $629 million and $3.1 billion, respectively. Revenue for these periods would represent 44% and 40% year-over-year growth.

The average analyst estimate for first-quarter and full-year non-GAAP EPS is $0.08 and $0.55, respectively.

In light of these analyst expectations for Twitter's current quarter and the full year, the market may be expecting it to provide guidance around these ranges.

Period

Expected Guidance for Revenue

Expected Guidance
for EPS

Q1 2016

$620 million-$640 million

$0.05-$0.10

Full-year 2016

$3 billion-$3.2 billion

$0.45 to $0.65

Investors will get a close look at actual results and guidance when Twitter reports fourth-quarter results after market close today. The report will be available on the company's investor relations page on its website shortly thereafter. Its live earnings call will be at 5:00 p.m. ET. 

Daniel Sparks has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Twitter. 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.

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