Social-media heavyweight Twitter (NYSE: TWTR) has underperformed the broader markets since the company went public in November 2013. Twitter priced its IPO at $26 per share, and the stock is currently trading at $39.50, indicating total returns of just over 50%. In this period, the S&P 500 has returned 161% to investors.
More recently, Twitter has been involved in a public spat with Elon Musk, the world's richest man. Musk, also the founder of Tesla, initially intended to take Twitter private in a deal valued at $44 billion. But Musk backed out of the agreement as he believes the number of spam accounts on the platform is much higher than previously expected.
While the saga between Twitter and Musk will likely continue to grab headlines in the second half of 2022, let's see what investors should expect from the former's upcoming quarterly results.
Twitter is scheduled to report its earnings for Q2 of 2022 on Friday, July 22nd at 8:00 am Eastern Time.
To listen to the call and access the earnings transcript, as well as the shareholder's letter and the company's financial statements for the quarter, all you need to do is go to Twitter's investor relations page.
Twitter is among the most popular social media platforms in the world. It's used by the world's most prominent personalities -- including politicians, actors, and sports stars -- to connect and engage with their audience.
In early 2021, Twitter stated its daily active users could increase to 315 million by December 2023, indicating annual growth rates of 20%. The rapid expansion of its user base and rising ad revenue would allow Twitter to increase sales to $7.5 billion in 2023, up from $3.7 billion in 2020.
While Twitter's sales have grown in the last few years, it is yet to report consistent GAAP profits, which also include non-recurring expenses. In 2021, Twitter's adjusted earnings per share (EPS) more than doubled to $0.20 per share, valuing the stock at a hefty trailing price to earnings multiple of almost 200x.
In Q2 of 2022, analysts expect Twitter sales to rise 23.4% year-over-year to $1.31 billion. Comparatively, adjusted earnings are forecast at $0.14 per share, compared to earnings of $0.20 per share in the year-ago period.
In 2022, analysts expect sales to rise by 14.7% to $5.82 billion, while adjusted earnings might increase to $0.75 per share. So, the Twitter stock is valued at 5.3x forward sales and 53x forward earnings, which is quite steep. However, in the last five years, its price to sales multiple was hovering around 8x and touched a high of 14x in April 2021.
Wall Street remains bullish on Twitter and expects shares to rise by almost 15% in the next 12 months, given consensus price target estimates.
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