Twitter reports first quarterly profit but still struggling to attract new users

Herbert Rhodes
February 9, 2018

Twitter signed 22 new live streaming partnerships in Q4 and hosted more than 1,140 live-streamed events.

For Twitter, all of the recent good news may end up having some unintended negative consequences.

Overall, Twitter posted total revenue of $2.4bn in 2017; a drop of 3% on 2016's $2.5bn. The company has introduced a slew of new measures to weed out abusive accounts.

But Wall Street's enthusiasm could rebound on the company longer term.

Twitter stock has now climbed 30% in 2017 and 67% year over year. At the time, the move was a natural one, created to bring brands better targeting, efficiency and measurement, as well as offering up an alternative to the Google and Facebook duopoly which accounted for in excess of 60% of the U.S. digital ad market past year. The stock's latest jump is likely to give potential acquirers even more reason to shy away.

Shares of Twitter closed the previous trading session at 34.89 up +7.97 29.61% with 25.829999923706055 shares trading hands.

Twitter also received a boost from a surprise rebound in its advertising business.

Twitter's results were impressive, at least if you grade on a curve. Fourth-quarter adjusted profit and revenue both topped analysts' targets.

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Twitter, Inc. (NYSE:TWTR) has the Market Capitalization of 20.93 Billion. It reported $87m from data licensing and other revenue, up 10% from a year earlier, while advertising revenue rose 1% to $644m.

And the company's gains seem to be coming from getting more of its users to come back to its service more often, rather than by substantially increasing its total number of users, said James Cakmak, a financial analyst with Monness, Crespi, Hardt, in a research note.

The company also announced record quarterly revenue and an increase in daily users - but total monthly active users failed to grow, staying at around 330 million.

Twitter has swung to profitability for the first time, after the social network unveiled a series of changes created to help it better compete for advertising, making shares in the company surge.

The strong financials were a welcome change for Twitter, which has had a bruising quarter as it continues to face criticism over how false information and harassment spread on its network. Facebook and Google are gobbling up almost all of the growth in online advertising. SG Americas Securities LLC grew its position in Twitter by 18,701.9% in the fourth quarter. Not only does Twitter look like a niche site by comparison - it's struggled, unlike its bigger rivals, to figure out how to make itself appealing to advertisers.

But analysts were split on what lies ahead for the company. OppenheimerFunds Inc. now owns 10,088,428 shares of the social networking company's stock worth $150,822,000 after purchasing an additional 2,999,690 shares in the last quarter.

Dorsey told analysts on a conference call that he was not planning a search to replace Anthony Noto, who is leaving as chief operating officer to become CEO of online lender Social Finance Inc and whose duties have been absorbed by others.

Just not at its current share price. Vetr cut shares of Twitter from a "buy" rating to a "hold" rating and set a $28.06 price target on the a research note on Monday.

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