Worse-than-Expected Twitter Report Offset by Share Buyback Program

Twitter, which recently received a new CEO, reported worse 4Q 2021 results than Wall Street analysts on average had expected. The company's guidance for Q1 2022 is also slightly below estimates. Twitter announced a new $4 billion share buyback program.

Twitter on Thursday after the close of trading published its financial report for the 4th quarter of 2021, which was the first report under the leadership of the new CEO.

CTO Parag Agrawal replaced Jack Dorsey in December, but this was not reflected in the rise in Twitter shares.

Shares of Twitter (TWTR), which have lost almost 46% over the past 12 months and 14.2% since the beginning of 2022, are slightly lower in post-market amid a general decline in tech stocks. Trading Signals and Predictions for Twitter Stocks.

Twitter report compared to Wall Street analysts' forecasts

  • Q4 earnings per share decreased by 13% (compared to Q4 2020) to $0.33 vs. $0.35 expected by the market.

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  • Total revenue rose 22% to $1.57 billion, below analyst estimates of $1.58 billion.

Total revenue for all of 2021 reached $5.08 billion, up 37%.

  • The number of monetized daily active users (mDAU) increased by 13% (y-o-y) to 217 million vs. 218.6 million predicted by analysts. In the previous Q3, the number of mDAU users was 211 million.

  • Total ad interactions, including clicks, were down 12% quarterly. However, the cost of each ad interaction increased by 39%.

Twitter leadership attributes this to a shift to video ads and other formats that typically attract fewer users but are more expensive and profitable for the company.

Twitter does not pay dividends, but it buys back its shares, which increases their value. During the report, Twitter announced a new $4 billion share buyback program.

"Twitter's buyback plan helps investors look past the company's relatively weak performance and outlook," said Jesse Cohen, senior analyst at Investing.com.

Twitter Forecast

The company is forecasting total first-quarter revenue of $1.17 billion to $1.27 billion. The average of this range is below analysts' average forecast of $1.26 billion.

New gene. Twitter CEO Agrawal said the company still believes it will be able to reach its goal of 315 million users and $7.5 billion in annual revenue by the end of 2023, and said that this year's user growth in the US and across the world must speed up.

The company said the impact of Apple's iOS Privacy Rules (AAPL) changes on its financial results remains modest.

However, according to CFO Ned Segal, Apple's changes could affect Twitter going forward as the company expands its advertising business, meaning ads aimed at promoting sales or other consumer actions. Twitter said it is working to mitigate future negative impacts of Apple's changes.

Market analysts expect Twitter to better monetize in the future, through digital advertising tools, subscription services, and the results of the company's NFT efforts.

Facebook parent company Meta Platforms (FB), Snap (SNAP), and Pinterest (PINS) have released their reports earlier. Meta shares are down 29.3% since the Feb. 2 report, while Pinterest (Feb. 3 report) is down 6.5% and Snap (Feb. 3 report) is up 66.2%.

However, the biggest negative impact of the new iOS privacy rules was reported by Meta, estimating a potential loss of around $10 billion in 2022.

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