GVA Research on BNN: Twitter’s Growing Pains

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Twitter: user growth, ad revenue

The +15% year/year user growth to 316mm driving a +61% year/year revenue growth to $502mm was a momentary pleasant surprise serving to highlight the vitality of the TWTR platform and take investor attention away from issues such as the CEO transition. However, as the management conference call was roundly disappointing as comments concerning the long road to popularity raised fears that the growth trajectory may decline, a fact underscored by 3Q15 guidance (revs $545-560mm (consensus $566mm), EBITDA $110-115mm) fell short of Street expectations.

CEO search

With interim CEO Jack Dorsey’s other company, Square, filing for an IPO, legitimate questions arise as to his capacity to focus on the issues confronting TWTR. Nevertheless, Dorsey indicates his focus is entirely on making sure that TWTR does not in its execution.

TWTR missing the tech rally?

TWTR’s failure to participate in the broader tech sector stock rally is a function of its own missteps. Clearly, having a dedicated CEO at the top would be an important, and necessary, first step in the right direction.