Twitter 2Q Earnings due BEFORE US Mkt Open

Equities 2 minutes to read

Kay Van-Petersen

Global Macro Strategist

Summary:  Erns Watch aims to highlight some of the key names that are in heavy rotation on investors' radars.


(These are solely the views & opinions of KVP, & do not constitute any trade or investment recommendations. By the time you synthesize this, things may have changed.)

Twitter 2Q Earnings out BEFORE US Mkt OpenToday 

 

Recent hacks, potential subscription business, activist investors…

  • We highlighted some of the earnings due this wk on Mon’s note (note some of the dates have changed, importantly Amazon is now due on 30 Jul Aft-Mkt)

  • As part of QBing for the SaxoStrats Squad & meeting the requests of our excellent Global Sales trading team (Bring out “The Oak”), KVP will be highlighting a few key names this earnings season. We touched on Tesla yest & they delivered after the US market close with a big beat +$2.18a vs. -$0.37e, Revenue also beat at +$6.04bn vs. expectations of +$5.09bn

  • Whilst stock closed yest at 1592, +1.53% on the day (remember Mon has a +9.5% spike, which saw a -4.5% pullback on Tues), in the after mkt the last print was 1657 which is c. +4% of Wed’s 1592 close. Depending on where we open, today could be an new ATH in the name that may eclipse the $1795 lvl that was kissed earlier on this month.

  • Anyhow onto twitter, twitter, twitter…

  • TWTR’s 2Q earnings will be out today BEFORE the US session start. Twitter has been the problem child of the social media listed names, at least performance & advertising wise vs. the likes of Zuk’s book (FB), U-Tube (Goog), Instagram (FB), Linked-In (MSFT), Snap (SNAP)… whilst paradoxically also the most revered… be it regional & social phenomena like the Arab Spring to Trumpian & Elon Tweets, to brilliant minds exchanging ideas, to millions of virtue signalers & keyboard basement warriors, to toxic trolls & proponents of everything evil & hateful in this world.

  • It has been a challenge of monetizing its users, whilst continuing to grow its user base vs. ever increasing competition across platforms in the global social media eco system. All this whilst actually pioneering a more active & ethical stance towards taking responsibility for the content on their platform vs. say Zuk’s Book (FB).   

  • Lets take a look at the top & bottom line expectations before settling on the most likely factors to focus on the results today.

  • Consensus 2Q Preview from Bloomberg is for -$0.012 EPS Adj., with Rev of $705M

  • In regards to overall industry focus, there are big concerns over some of the advertising boycotts across social media from companies whose customers don’t want to see the unregulated media companies operate with very little policing of the content on their platforms. This can be as microscopic as niche hate groups, to macroscopic to political messages that sway voters (without them realizing it) towards making certain decisions.

  • For too long, the tech companies have had the best of both worlds – product reach & a lack of need for regulation for the content on their site (i.e. not need for the costs & infrastructure that comes with filtering, monitoring & also balancing the constant flow of content). This is a structural problem that is not going away anytime soon, the net question obviously for shareholders is what is the bottom line effect on advertising revenue?

  • More specifically to the company there will be two things front & center. The first will be the recent hack, that saw prominent accounts (Obama, Gates, Elon, KVP – ok not KVP) in essence sending out tweets linked to a classic scam & also lead to Twitter having to shut down thousands of accounts to get to the bottom of the hole in their system.

  • More importantly will be their signaled intent to potentially have a separate subscription model. A cancellation of this idea, would likely be a clear negative. Whilst a green light, we will learn from the hacking event, etc… will be positive. At the end of the day, there is a clear need for a subscription like model, there is a market for a more filtered, higher signal to noise version of twitter. Question of course is how big is that, how does that ecosystem look like, is it ad free or not, etc.

  • A few other underlying trends continue, Jack Dorsey as CEO… seems to continue to divide folks as to whether the co-founder has overstayed or is best placed at the helm. As well as the activist HF Elliot, that has a +$1bn stake in the company, that initially tried to force out Jack.

  • Lastly, there is always the perpetual question of – why doesn’t an amazon, google, tencent, apple, softbank, Russian Shell-Company or Microsoft buy the company? At barely $30bn mkt cap, “only” up +15% YTD this is chump change for these companies.

  • KVP used to postulate that the most gangster of moves, would have been Bezos buying twitter & switching off Trump’s account… alas, that drama will have to unfold in another universe.

  • At the very least, with the countdown to the Nov 3 US elections, the Twitter-verse will stay busy. And in a Biden presidency, will be less entertaining. One key thing that trump pioneered – that he will obviously never get the credit for – is that direct communication to the world, that will overtime become the norm for global leaders, CEOs & other limelight executives.
 -

Start-to-End = Gratitude + Integrity + Vision + Tenacity. Process > Outcome. Sizing > Idea.

This is the way

KVP

Disclaimer

Saxo Capital Markets (Australia) Pty Ltd prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Combined Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at https://www.home.saxo/en-au/legal/.

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

Please read our disclaimers:
- Full Disclaimer (https://www.home.saxo/en-au/legal/disclaimer/saxo-disclaimer)
- Analysis Disclaimer (https://www.home.saxo/en-au/legal/analysis-disclaimer/saxo-analysis-disclaimer)
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-au/about-us/awards

Saxo Capital Markets (Australia) Pty Ltd ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide and Product Disclosure Statement to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as CFDs and Margin FX products may result in your losses surpassing your initial deposits. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.
Please click here to view our full disclaimer.