2014-02-06 07:39:38 - “What drove Twitter (TWTR) stock so high was speculation and hype, the party is over” according to Laureate BVI
Twitter’s (EPS) of $0.02 beat Wall Street estimates by $0.03, and a revenue of $243 million beat projections by $26.14 million, constituting a 116% increase compared to the same period last year.
Twitter's advertising revenue, which makes up 90% of the company's total revenue, came in at $220 million, an increase of 121% year over year; mobile advertising revenue was more than 75% of total advertising revenue.
Twitter (TWTR) recently rose over 140% to $65.50, which gives it a market capitalization of about of about $36 billion, valuing it higher than half the companies in the S&P 500.
The primary reason Twitter (TWTR) is falling now is because the fundamentals are weak according to Laureate BVI.
Today, Twitter the micro-blogging service, has monetized
real-time news tracking and research. According to CEO Peter Tasca of Laureate Trust, “Twitter reported a $1.41 ah share loss on revenue of $665 million on a GAAP basis. The stock is dropping because of guidance; the business model they are using is not working.”
Twitter said it expects $230 million to $240 million in first quarter 2014 revenue. The San Francisco-based micro-blogging company also said revenue for the full year is expected to come in at between $1.15 billion to $1.2 billion. Adjusted earnings before interest, taxes, depreciation and amortization are projected to be in the range of $150 million to $180 million.
Twitter continues to pursue revenue opportunities such as conversation targeting, tailored audiences, conversion tracking and promoted accounts. Other efforts like Vine, a micro-video platform, Twitter Alerts, custom timelines, and the ability to send and receive photos via direct message are also geared towards improving user experiences.
“Customers are leaving and they are spending a ton of money to sign up new customers, you have a messaging platform that can’t be monetized and now Twitter management is trying to find a new vehicle that will make them profitable” according to Tasca.
Twitter has a long way to go, it has more than 240 million users compared to 1 billion for Facebook and annual revenue of $600 million, while Facebook generates more than $5 billion.
Tasca states, “Twitter is a great concept but the business model still needs to be proven as profitable and sustainable.”
In 2013 Laureate issued a Buy recommendation on Facebook (FB) when the stock was at $27.43 per share. Laureate has reiterated it’s Buy rating on Facebook (FB) with a return of more than 120% for their clients year to date.
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