Twitter, Inc. Earnings: 3 Metrics to Watch

Twitter, Inc. Earnings: 3 Metrics to Watch

Author: Daniel Sparks / Source: The Motley Fool Expectations are low ahead of Twitter's (NYSE:TWTR) first-quarter earnings release this we

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Expectations are low ahead of Twitter‘s (NYSE:TWTR) first-quarter earnings release this week. Shares are down about 10% year to date and are trading at under $15 at the time of this writing — not far from the stock’s 52-week low of $13.73 and light years away from levels above $50 seen as recently as two years ago.

An earnings preview of three important areas of Twitter’s business to examine when the company’s first-quarter results go live reveals some insight into the market’s bleak expectations for the stock. Here are three metrics investors should check on after Twitter reports its earnings on Wednesday morning.

Man using his smartphone
Image source: Getty Images.

Monthly active users

One area of concern for Twitter investors in recent quarters has been the company’s slow user growth. In the most recent quarter, for instance, Twitter’s 319 million monthly active users were up just 4% year over year. In the same period, Facebook‘s (NASDAQ:FB) 1.86 billion monthly active users increased 17% year over year. Indeed, all of Facebook’s social networks are growing faster than Twitter. Thanks to their incredible growth rates, Facebook’s messaging apps WhatsApp and Messenger now each have 1.2 billion users and Facebook’s photo- and videocentric social network Instagram boasts 600 million monthly active users.

Daily active user growth

In Twitter’s recent shareholder letters, management has tried to encourage investors about its user growth by pointing out that its daily active users are growing at faster rates than its monthly active users. While the company hasn’t said exactly how many daily active users it has, these users were up 7% and 11% in Twitter’s third and fourth quarter of 2016, respectively.

When Twitter reports its first-quarter results on Wednesday, investors should look for 11% or stronger year-over-year growth in daily active users in order to regain confidence in the company’s…

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