Twitter 2Q Earnings due BEFORE US Mkt Open
Equities 2 minutes to read
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.
- Here is the link to their Q1 2020 Earnings Transcript.
Start-to-End = Gratitude + Integrity + Vision + Tenacity. Process > Outcome. Sizing > Idea.
This is the way
Latest Market Insights
Outrageous Predictions 2023: The War Economy
- The constantly growing global need for energy drives the world's richest to huddle up and launch a R&D project in a size the world hasn't seen since the Manhattan Project gave the US the first atomic bomb.
French President Macron resignsThe political stalemate in France and the rise of Marie Le Pen following the 2022 elections corners President Macron, forcing him to give up on politics and resign from his position. At least for now.
Gold rockets to USD 3,000 as central banks fail on inflation mandateAs markets and central banks realise that the idea that inflation is transitory is wrong, and that prices will remain higher for longer, gold is sent through the roof, hitting a price tag of USD 3,000
EU Army forces EU down path to full unionWith continued challenges in the region and a US military that isn't aggressively enacting its former role as global policeman, the European Union agrees to create its own armed forces, bringing the whole region closer.
A country agrees to ban all meat production by 2030In an effort to become one of the global leaders on the path to net-zero emissions, one country decides to not only put a heavy tax on meat, but to ban domestic production entirely.
UK holds UnBrexit referendumFollowing a recession and domestic pressure, the United Kingdom is thrown into political turmoil that will end with a vote to wind back Brexit.
Widespread price controls are introduced to cap official inflationHistory tells us that with the war economy comes rationing and price controls. And this time is no different, as policymakers introduce strict price controls that lead to a range of unintended consequences.
OPEC+ & Chindia walk out of the IMF, agree to trade with new reserve assetSanctions against Russia have caused widespread turmoil due to US Dollar moves in countries across the globe that don't consider the US an ally. To relieve themselves from this, they leave the IMF and create a new reserve asset.
USDJPY fixed to the USD at 200 as Japan overhauls financial systemFollowing the challenges that faced the Japanese Yen in 2022, the Bank of Japan attempts to keep the currency from sliding. Unsuccessful on the long-term, Japan will launch a reset of its entire financial system.
Tax haven ban kills private equityWith the war economy comes an increased focus on national interests and sovereign nations' ability to assert themselves. In that regard, the OECD countries turn their attention on tax havens and pull the big guns out, banning them altogether.