Twitter Beats Earnings Expectations But Sees Stock Slightly Dip as Company Warns of Higher Expenses in the Future

By Thomas Price Tuesday, February 9, 2021

As big tech begins to report their quarterly earnings, many analysts have been expecting major returns after an extremely lucrative 2020 for most of the major companies. Social media app company Twitter was no exception, with analysts projecting large growth across all factors. In the most recent Q4 numbers, the company came through on nearly all fronts as the app business continued to see strong growth in the final few months of 2020 into 2021. While this may be true, many investors were left slightly apprehensive about the future of the social media company, as user growth fell short of expectations. Despite the slight disappointment, the social media business still saw their stock rise in after-hours trading.

Person opening Twitter app on their phone.

Twitter’s Quarterly Report by the Numbers

In the company’s most recent 2020 Q4 numbers, Twitter posted strong numbers across the board, beating out most analysts’ expectations. In fact, the business posted $1.29 billion in revenue, a year-over-year growth of 28%. The company also beat analyst projections by $100 million as expectations for the quarter were at $1.19 billion. The social media company also over-delivered when it came to earnings per share with business growth pushing Twitter to $0.38 per share, outpacing the Wall Street forecast of just $0.31 per share.

Where the app company fell short, however, was in user-based metrics. The social media app saw the amount of monetizable daily active users boost up to 192 million, up 40 million year-over-year. Despite the strong numbers, the business failed to meet the lofty projections from analysts, who expected to see 193.5 million. While the social media business fell slightly flat on this front, most investors were happy with the results and the future outlook the company has forecast.

Twitter's Stock Bump and Future Outlook

Due to the encouragingly strong revenue and earnings per share, the social media app saw its stock shoot up in after-hours trading. In fact, since the release of the quarterly report, Twitter shares are up over 3% after hours, boosting the business up to over $62 per share. Part of the optimism from investors stems from the social media company releasing strong guidance for the following quarter. 

The business expects to see revenues for the quarter land somewhere between $940 million and $1.04 billion with the expectation that total revenue will outpace growing expenses. Twitter expenses are predicted to grow by 25% or more though mostly from the app’s plan to expand its workforce by 20% in the engineering, product, design, and research departments. Outside of direct numbers, the app company plans on finalizing the buildout of their data center in 2021, which should result in added revenue growth and the ability to better support audiences.

About the Author

Headshot of Thomas Price

Tom Price is a writer focusing on entertainment and sports features. He has a degree from NYU in English with a minor in Creative Writing. He has been previously published for Washington Square News, Dignitas, CBR, and Numbers on the Boards.

Related Articles