Wolf Blitzer says “Follow Me on Twitter”

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Twitter Update – One of the Top Tech Stocks is on Sale.

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Twitter – An Amazing Story

One of the great innovations of the social media age, is Twitter. Twitter is a mainstay of how we communicate.

• When an event happens on a remote mountaintop, it instantly is reported on Twitter
• When Donald Trump says something, it is instantly on Twitter
• When people want to mention something, they use Twitter first
• When we want to find out what is trending, what is happening, we turn to Twitter.

People turn to Twitter frequently during the day, every day.

The Stock Price & The Great Disappointment

We quote USA Today to emphasize the disappointment

Twitter shocked Wall Street twice on Tuesday. And investors made the company pay.

Shares of the social media company plunged after it reported first-quarter revenue below Wall Street estimates and its own guidance and issued a disappointing outlook for the current quarter and for the year.

Compounding the mounting challenges facing Twitter, trading in its shares was halted after quarterly results leaked before the market closed. New Jersey research firm Selerity reported the company’s results — ironically — in a series of tweets, forcing Twitter to rush out results.

Did you catch that? The news of the so-called disappointment, was announced USING TWITTER.

The stock plummeted from $52 to $39 and has drifted lower since, closing today in the mid 20’s. The stock chart follows – very ugly.

A Horrendous Stock Chart

A Rocky Road for a tech darling!

Let’s Examine the Published Financial Results

Twitter had $436 million revenue in the first-quarter, which was slightly below analysts’ estimate of $456 million. It was also slightly below Twitter’s guidance of $440 – $450 million. Management blamed the result on “lower-than-expected contribution from its newer direct response products.”  In fact, this was very small miss, and rather insignificant.

Earnings per share were $0.07, which beat the consensus expectation for $0.04. Not too shabby. So Twitter is ahead of projections in making profit.

On guidance Twitter said it expects its under-performing direct response products to continue to make revenue growth more difficult than expected. Initial guidance for revenue was $2.3 – $2.35 billion in 2015. Revised guidance is $2.2- $2.3 billion. Does this tiny miss sound earth-shattering to you. It sounds very insignificant to me. The market always swings wildly, and as usual the reaction is wildly out of proportion to the reality.

Some other Relevant Information

Revenue rose 74% from the year-ago quarter.

Management expects full-year revenue to rise 61% over 2014.

Monthly active users continued to grow and accelerated their growth from 2% from the 3rd to 4th quarters 2014 – to 5% from the 4th quarter to the 1st quarter.

Twitter’s amount charged advertisers every time a customer engages with an ad, was up 30% from the year-ago quarter — the highest Twitter growth on record for this metric.

Now it is also true that revenue growth, although still impressive, is not as impressive as it formerly was. Enormous guidance for previous periods was greater than current expectations. Twitter can not sustain the growth of its early years over the long haul. To expect an ever increasing growth curve is an impossibility. No company anywhere could accomplish this.

All in all, in spite of slightly decelerating growth, (which growth is still massively IMPRESSIVE) there were no major red flags during the quarter. This social media story is still growing at a 18% year-over-year monthly active user growth.

Twitter’s business looks quite amazingly healthy and a mammoth growth story.

Current Analyst Targets

Courtesy Yahoo Finance

To cast another light on the subject, the following list of Analysts Targets (copied from Yahoo Finance) still gives target prices in every case substantially higher than today’s market close. These are mostly lowered targets as a result of the April fiasco.

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