Twitter Inc. is scheduled to report second-quarter earnings after the market closes Tuesday.
Since its last earnings report, Twitter TWTR, +1.01% has made multiple product updates aimed at simplifying the platform and jump-starting slowing user growth. But these updates have been met with fear that the platform is still too complicated and rumors that the company may be acquired by a bigger player.
Here’s what to expect:
Earnings: Analysts surveyed by FactSet expect Twitter to report earnings of 9 cents per share. The Estimize consensus, made up of 163 crowdsourced estimates, is 11 cents.
In the year-earlier period, Twitter reported earnings of 7 cents per share, beating analyst expectations.
Revenue: Analysts expect Twitter to report revenue of $607 million, according to FactSet, while the Estimize consensus has revenue at $606 million. Last year in the same quarter, Twitter reported revenue of $502 million, beating expectations.
Stock Reaction: Shares of Twitter have gained 6% in the past three months, beating the S&P 500’s SPX, -0.46% of 3%. But the story in the past 12 months isn’t as cheery: Twitter shares have fallen 50% in that time, compared with the S&P 500’s gain of 2%.
The mean rating of 40 analysts polled by FactSet is hold, with an average price target of $18.11.
What else to look for: Analysts expect Twitter to report earnings in-line with expectations, with the possibility of a beat, but they say those numbers won’t matter as much as monthly active users.
Wedbush analysts expect an uptick in revenue, based on a seasonal increase in ad spending and an increase in social media usage around the presidential election. But they are projecting flat sequential monthly user growth in the U.S., as they expect recent changes made by Twitter won’t add new users in the short-term.
“We think that its service is too complicated and difficult to use for the average internet user despite multiple changes,” the analysts wrote.
Announced changes to Twitter’s service include the addition of stickers for photos on Twitter, the ability to tweet longer videos and three improvements that allow more content in 140-character tweets. Deutsche Bank analysts also see these changes as having a “small positive impact on engagement.”
Most recently, users voiced concern over Twitter’s handling of online abuse, sparked by the treatment of actress Leslie Jones.
One bright spot is Twitter’s partnerships in live-streaming, including a partnership with the National Football League, which analysts say may bring needed user engagement in the long term. MKM Partners say the stock depends on the success or failure of these live-streaming partnerships.
Twitter’s stock has been climbing recently, but Wedbush analysts attribute that to rumors that the company may be acquired.
Raymond James analysts also expect in -line revenues and flat U.S. monthly user growth for the second quarter, but see tougher comparisons in the current quarter amid competition from Facebook Inc. FB, +0.07% with revenue missing Wall Street expectations. The analysts downgraded Twitter on Friday to market perform from outperform.
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