As the earnings season continues, on Thursday, Twitter (TWTR) released a report that really got investors excited. Today, we'll take a close look at the report and talk about the good news, the bad news, a confirmation that Twitter and Google will be teaming up once again, and discuss their stock price following the report. So, let's get right to it.
Twitter's Q4 Good News
When it comes to earnings, it was all good news at Twitter Thursday after hours. In the fourth quarter, Twitter generated total revenue amounting to $479 million.Compared to the same quarter last year, that's growth of 97%. An investor couldn't ask for news that's better than a nearly 100% year over year increase in revenue.
Twitter's Q4 Bad News
While Twitter blew away expectations with regard to revenue in the fourth quarter, they did have their share of bade news to report as well. Unfortunately, the company has been struggling to get new users interested in their social network. As a matter of fact, Twitter only added a meager 1% to their active users. As the new user data continues to be a problem, investors are starting to grow concerned about the company's ability to bring in a larger audience. Without new user growth, investors are concerned that Twitter may reach a plateau relatively soon. However, there is one trick the company has up its sleeve that may solve the new user debacle.
Google Team Up Confirmation
Recently, there have been quite a few rumors flying around online about a team up between Google and Twitter that's built around the Firehose. The Firehose is a pool of all twitter data streaming in real time. That includes tweets, pictures, favorites, retweets, and more! Google and Twitter did this once in the past between 2009 and 2011; however it ended as Twitter felt that with Google having their results in real time, the deal may jeopardize their own page view totals. However, that deal has come back to life.
Moving forward, we're going to start seeing a lot more tweets in Google results. So, when users that aren't logged into Twitter see the results in searches, they are more likely to sign up; ultimately solving the new user issue (at least that's the plan).
How Investors Are Reacting To The News
Based on the stock market reaction to the news, I'd say that investors are happy overall with all they saw in the Q4 report. On Friday, the company's stock price was on a strong uptrend; rising by around 10% in a single day. I'm sure that if the new user issue wasn't there the stock would have risen further, but overall, 10% is still pretty impressive. Currently, the price for a share of Twitter stock is $42.24; and if you ask me, we can expect to see that price continue to rise.
Final Thoughts
Based on what I saw in Twitter's fourth quarter report, I'm incredibly happy with the direction the company's moving in. While they are struggling to attract new users, we have to remember that every company has an area or two where they could afford to improve. I think one of the reasons that investors are so happy overall is that Twitter not only recognizes the problem, but they're taking action to fix it. Personally, I think the Twitter/Google team up is great for both assets involved. Google will be able to access, analyze, and provide Twitter data in real time. In exchange, Twitter reaps the benefit of more publicity; which should ultimately lead to more new users on the social network!
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