The return of live sports in the U.S. could give Twitter a boost.
Alastair Pike / AFP via Getty ImagesTwitter stock is taking a hit as Wall Street digests the company’s first-quarter earnings report. Analysts say the market was disappointed by the company’s second-quarter outlook and signs of weakness in user growth.
Twitter stock (ticker: TWTR) was down about 13% to $56.72 late Friday morning. The S&P 500 index had fallen 0.6%.
BofA Securities analyst Justin Post wrote Friday that Twitter’s first-quarter revenue was in line with expectations, though U.S. brand advertising was slow in January and February. He noted that user growth was a tick lower than expected.
Post called the company’s second-quarter outlook confusing, arguing that the call should have been higher given that management pointed to a recovery in spending by brands in March. The company said revenue is likely to be between $980 million and $1.08 billion, while the consensus view on Wall Street has been that the figure should be $1.06 billion.
Wedbush analyst Ygal Arounian wrote in a note on Friday that he thinks Wall Street will focus on the slowdown in user growth, noting that investors are increasingly focused on whether users remain engaged with apps such as Twitter now that the pandemic is receding in the U.S.
“Twitter’s digital advertising peers all saw significant beats on revenue with guidance ahead of 2Q expectations, meaning Twitter, so far, has participated somewhat less in the digital advertising market rebound,” Arounian added.
In a note titled “This Birdie Finds Turbulence Out of Thin Air,” MKM Partners analyst Rohit Kulkarni called it a mixed quarter for Twitter. He said advertising revenue growth seemed to lag behind peers like Pinterest (PINS) and Snap (SNAP), which reported earlier in April. He too noted that Twitter’s user growth was softer than expected.
“While yesterday’s results do not inspire confidence in management’s ability to hold a steady cadence in fundamentals, we think Twitter remains a solid ‘re-opening play’ with live sports and events over the summer,” Kulkarni wrote.
Oppenheimer analyst Jason Helfstein is also looking ahead to the return of live events, saying their suspension has been weighing on revenue growth.
“While the market reacted to weaker 2Q outlook, following upbeat investor day, we are more upbeat on product cadence and expect Brand strength,” in the second half of 2021, Helftstein wrote.
At least for now, investors seem less optimistic.
Write to Connor Smith at connor.smith@barrons.com
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