Why Twitter Inc (TWTR) Shares Shot Higher

Twitter Inc (NYSE:TWTR) shareholders should be smiling today after the social media platform released its first-quarter results, which demonstrated improving momentum in several key areas, including audience engagement and growth with video now Twitter’s largest revenue-generating ad format.

In reaction, Twitter shares rose nearly 9% to $15.99 in Wednesday’s trading session.

Revenue of $548 million exceeded Street consensus of $517 million. Ad Revenue declined 11% yr/yr to $474 million, while Data Licensing and Other Revenue grew 17% to $75 million. Adjusted EBITDA of $170 million came in meaningfully above Street consensus of $98 million. Looking forward, Twitter guided second-quarter EBITDA of $95­-$115 million, compared to consensus estimates of $141 million. EBITDA margin guidance of 21.0%-­21.5% implies revenue in a wide range of $442­-$548 million, compared to Street consensus of $556 million.

“We’re proud to report accelerating growth in daily active usage for the fourth consecutive quarter, up 14% year-over-year,” said Jack Dorsey, Twitter’s CEO. “We’re delivering on our goal to build a service that people love to use, every day, and we’re encouraged by the audience growth momentum we saw in the first quarter. While we continue to face revenue headwinds, we believe that executing on our plan and growing our audience should result in positive revenue growth over the long term.”

“We believe Twitter is the best place to drive brand perception, and we’re continuing to showcase our unique value proposition for advertisers,” said Anthony Noto, Twitter’s COO. “We’ve received positive early feedback from our ad partners as we highlight the improved return on investment from our audience growth and better pricing. We’re proud of our performance in Live after just 6 months – last quarter alone we streamed more than 800 hours of live premium video and reached 45 million unique viewers, an increase of 31% from the previous quarter. We remain focused on our initiatives to grow revenue by simplifying our revenue product portfolio, communicating our progress to advertisers, and re-allocating resources to our highest revenue generating priorities.”

On the ratings front, Twitter has been the subject of a number of recent research reports. In a report issued on April 24, Cantor analyst Kip Paulson reiterated a Hold rating on TWTR, with a price target of $16, which represents a potential upside of 9% from where the stock is currently trading. On the same day, RBC’s Mark Mahaney reiterated a Sell rating on the stock and has a price target of $12.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Kip Paulson and Mark Mahaney have a yearly average return of 14.2% and 17.5% respectively. Paulson has a success rate of 91% and is ranked #1426 out of 4571 analysts, while Mahaney has a success rate of 73% and is ranked #22.

Overall, 10 research analysts have rated the stock with a Sell rating, 14 research analysts have assigned a Hold rating and 4 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $15.32 which is 4.5% above where the stock closed yesterday.

Twitter, Inc. is a global platform for public self-expression and conversation in real time. It provides a network that connects users to people, information, ideas, opinions, and news. The company services include live commentary, live connections and live conversations. Its application provides social networking services and micro-blogging services through mobile devices and the Internet. It can also be used as a marketing tool for businesses. 

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