Twitter Faces Critical Earnings Test

Twitter releases its aboriginal balance abode back a berserk acknowledged banal alms on Wednesday, in what is actuality apparent as a analytical analysis for the accepted messaging platform.

Shares in Twitter accept soared from the alms amount aftermost November of $26, and analysts say that to sustain that drive Twitter charge prove it can abound and move against profitability.

Twitter shares rose 1.6 percent to $66.32, their accomplished akin back December.

Because Twitter has never delivered a profit, allegory its amount is a catchy task.

Wall Street expects Twitter to abode continuing losses in the fourth quarter. But analysts will be analytical the after-effects for assets in announcement revenues, Twitter’s user abject and added metrics that admeasurement “engagement,” or how bodies use the platform.

Mark Mahaney at RBC Capital Markets charcoal upbeat with an “outperform” appraisement on Twitter.

“We abide absolute on Twitter’s adeptness to become one of the Web’s arch utilities (alongside Google, Amazon, Facebook),” he wrote in a agenda to clients.

“Twitter has displayed actual able-bodied advance in key metrics, and we accept aplomb that this drive can abide as the aggregation develops its announcement platform… we abide agog about the company’s abiding opportunity.”

Twitter has fast become engrained in accepted ability but charge still argue investors of its business model, accepting absent added than $440 actor back 2010.

With 232 actor users and growing, Twitter is accepted to be able to ability advantage over time by carrying ads in the anatomy of answer tweets, and from its abstracts analytics. The analysis close eMarketer estimates Twitter will accompany in about $1 billion in 2014 in ad revenues.

But analysts at Cantor Fitzgerald acclaim “sell” for Twitter adage its appraisal is “excessive,” seeing “more downside than upside short-term.”

The Cantor Fitzgerald analysts said alike with able announcement and added gains, Twitter could face burden because added shares will appear on the bazaar afterwards the “lock-up” cessation that prevented cabal sales so far.

Arvind Bhatia at Sterne Agree says in a agenda to audience that Twitter is acceptable to appearance assets in users, acquirement and assurance but that he charcoal “neutral” on the stock.

“We abide to like the Twitter belvedere and accept in the company’s abiding prospects,” he said. “However, we abide aloof accustomed the stock’s cogent exceptional to its high-growth peers.”

Morgan Stanley’s Scott Devitt, who ante Twitter as “underperform,” said investors should anxiously accept to management’s plans.

“We attending for administration annotation to focus on accouterment acumen accompanying to Twitter’s user advance and engagement, while discussing fresh artefact developments that could drive approaching acquirement initiatives, abnormally in targeting offline TV ad dollars,” he said.

A added boilerplate Twitter?

Devitt said Twitter charge abode issues of advertising, abnormally on mobile, and that he wants to apperceive “How does Twitter plan to advance user advance and accomplish Twitter added mainstream?”

Paul Ausick at 24/7 Wall Street said Twitter may be benumbed the coattails of Facebook, which acquaint able after-effects aftermost anniversary and buoyed the amusing media sector.

“Without Facebook’s big balance abode aftermost week, it is apparently fair to say that Twitter banal would be trading at about seven percent beneath area it is trading today,” Ausick said in a blog post.

“Should Twitter abort to accommodated estimates on Wednesday, aggregation administration could accept a lot of answer to do.”