Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money

76% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

FREE EBOOK

How to Day Trade Stocks & Indices

  • Place your first trade
  • Identify 9 chart patterns
  • Pro strategies step-by-step

You'll also receive our newsletter and other Opto emails in accordance with our privacy policy. This form is protected by reCaptcha

  • Updates

Investors Ignore Twitter’s Low User Growth As Ad Sales Surge In Earnings

On Tuesday, Twitter (NYSE: TWTR) posted quarterly earnings that beat Wall Street estimates. The social media company’s solid beat was influenced by ad product improvements which luckily encouraged shareholders to look past Twitter’s bleak forecast for user growth. The microblogging site said it expects user numbers to slow down to low double-digits this year as the boost from the pandemic dies out. 

This article was originally published on MyWallSt — Investing Is for Everyone. We Show You How to Succeed.

 

Twitter’s Q4 earnings

Here are some key figures from Twitter’s fourth-quarter earnings report: 

  • Total revenue: $1.29 billion, up 28% year-over-year (YoY). 
  • Adjusted earnings per share: $0.38 versus $0.31 forecasted. 
  • Average monetizable daily active users: 192 million, up 26% from a year earlier. The Street was expecting 196.5 million. 
  • Ad revenue: $1.15 billion, up 31% from the same period a year ago.
  • Expenses for 2021: will increase 25% for the year but also said that revenue would outpace costs.  

Twitter said that user growth had increased due to global topics being discussed on the app, including the U.S. election and COVID-19. However, changes made to combat misinformation during the election caused a dip during the quarter. Investors looked past this though as ad revenue and total profitability were all higher than estimated. 

The app that famously booted former-President Donald Trump has been the subject of global debates lately over concerns about free speech. Twitter was also in the spotlight after it refused to comply with the Indian government’s instruction to block accounts linked to the farmers’ protests. During the earnings call, CEO Jack Dorsey tried to soften the impacts of the account closures in January after the Capitol riot, stating: 

“We are a platform that is obviously much larger than any one topic or any one account. 80% of our audience is outside the United States.” 

The social blogging site is in the midst of building tools to help advertisers increase product sales and target ads to interested users, which other social media companies have been doing for years. This should help the company earn even more money from advertisers. 

Furthermore, the company is also trying to tackle misinformation spreading on the app by testing out a Birdwatch feature. This addition allows a select group of people to add context in the comments of tweets that have been flagged as potentially false or harmful, similar to Reddit’s moderation style. The work that Twitter is doing should help improve the reputation of the site which might encourage more advertisers to use the platform. 

 

Twitter’s subscription services

However, investors were disappointed to not hear more details about the company’s subscription plans following its acquisition of Revue in January. If you’re on Twitter, you will likely have heard the famous line “I can’t believe this app is free.” Well, parts of it might not be for much longer. Twitter snapped up newsletter tool company Revue to explore the addition of subscription services to supplement its advertising revenues. However, Dorsey warned investors that the company did not expect to see substantial revenue from subscription services until 2022. 

Twitter also released a test of “Spaces” in the fourth quarter, an audio-chat room feature similar to the voice-based app Clubhouse.

 

How did Twitter perform in Q4?

Twitter managed to rack up its second billion-dollar quarter which sent shares up 3% in extended trading. The California-based company is also making significant moves to help improve its ad business and add features to safeguard its followers from false information at the same time. 

The newsletter subscription service is a unique revenue source for the company to explore that has not been touched on yet by some of its competitors. As the platform continues to be used as a center place for individuals and businesses to discuss politics, the stock market, and pop culture — any way Twitter can gain more income from the useful information that’s shared on the app is a great move.

 

MyWallSt makes it easy for you to pick winning stocks. Start your free trial with us today— it's the best investment you'll ever make.

 

Disclaimer Past performance is not a reliable indicator of future results.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.

*Tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.

Continue reading for FREE

  • Includes free newsletter updates, unsubscribe anytime. Privacy policy

Free ebook

Tricks of the trade: 7 interviews with the world’s top traders

Get it now

Related articles