Twitter Inc (NYSE:TWTR) reported its first quarter earnings report on Tuesday. This earnings report from Twitter Inc (NYSE:TWTR) missed the expectations on many areas, but the key talking point in the report was Twitter Inc (NYSE:TWTR)’s lower full year guidance for 2015 than expected. Twitter Inc (NYSE:TWTR) stock took a hit and dropped around 20% as the news about earnings report break out. Twitter is currently trading under $40 per share. Research Director at Action Alerts PLUS, Jack Mohr talked on ‘The Street’ about what went wrong for Twitter stock and what to expect from it.
Mohr said that Twitter’s quarter earnings were ok and he feels that if it was just for the quarter earnings, the stock would not have been down this much. He pointed out that the lower guidance for full year 2015 was the major triggering point for around 20% downward movement of the Twitter stock. He mentioned that the expectations for second quarter and full year guidance were too high and Twitter completely messed it up by giving much lower guidance.
Mohr said that Twitter is finding it difficult to monetize its platform. He pointed out that Twitter has a very innovative platform, but he feels that it is very tough to monetize its platform, in fact he thinks that it is much harder than Facebook, mainly because of the simplicity of Twitter’s business model.
“[..] I think the word broke down was their advertising, they have this direct response advertising, where they launch this initiative, where companies can advertise and have direct targeting but also will have a direct link to downloading the app or downloading the product or what not and that was supposed to be huge hit and that just did not take off. So that’s concerning, but they are innovative. Periscope which is their video streaming platform had 1 million people sign up in the first 10 days and so there is innovation, but how do you make money out of it,” Mohr said about Twitter.
Almost everyone is confused about Twitter stocks. Is it the right time to buy this stock or should they stay away from it? Mohr said that Twitter stock is down by around 20% and he mentioned that it is going to get interesting as the stock has gone under $40. He thinks that Twitter was determined to come up with this guidance and wash everything out.
Mohr feels that if Twitter stock falls further, it might get interesting as it might allow a chance for some big names like Google Inc (NASDAQ:GOOGL) to jump in and acquire Twitter. He said that bigger names are definitely in it, since Twitter platform has a lot of opportunities, but he pointed out that the current management team is not capitalizing on the potential that the platform has.
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