Twitter reported earnings of $68 million, or 16 cents a share, above the 14 cents a share for the quarter that analysts polled by FactSet had been expecting. Revenue totaled $1.04 billion, up 28% and above analysts’ forecasts of $1 billion.
What left analysts “less enthused” was Twitters user growth rate, which grew by 7 million from the fourth quarter to 199 million but still fell shy of forecasts.
Twitter’s overall more-moderate sales and earnings growth relative to competitors like Facebook (FB) - Get Report and Google-parent Alphabet (GOOGL) - Get Report also disappointed both investors and Wall Street analysts.
Piper Sandler analyst Thomas Champion said his team came away “less enthused” by the results, noting that “a more decisive beat on user growth would have instilled confidence.” His team left its neutral rating on the stock but cut the one-year price target to $66 from $71.
Barclays analyst Ross Sandler called Twitter’s U.S. ad growth numbers “concerning” given 50%-plus hyper growth seen in other mobile application products, noting it wasn't “entirely clear” how Twitter can bring compound annual daily average user growth up to 20% next year.
He left his rating at underweight and cut his price target to $48 from $52.
Truist analysts Youssef Squali and Naved Khan noted in their own assessment that it was a good quarter for Twitter, “but one which pales in comparison with larger peers.” Still, the analysts expect Twitter to see sustained user growth due to product improvements such as Topics.
Squali and Khan kept their buy rating on Twitter and cut their price target to $70 from $74.
Keybanc analyst Justin Patterson noted that Twitter didn’t catch the latest wave in online advertising growth, unlike its competitors, but noted there will be more opportunities ahead, adding that earlier estimates had been “too aggressive on the initial revenue trajectory.”
He kept his overweight rating on the stock but cut his price target to $77 from $90.
At last check, shares of Twitter were down 12.81% at $56.75.