Microblogging site Twitter (NYSE:TWTR) is set to release its second-quarter results on Friday, July 22, before the market opens.
The Street expects Twitter to post earnings of $0.15 per share on revenues of $1.34 billion. This represents a year-over-year slump of 25% in earnings ($0.20 per share) and a leap of 12.6% in revenue ($1.19 billion).
Musk’s TWTR Buyout Overhang
Tesla (TSLA) CEO Elon Musk backed out of his $44 billion deal to buy the social media company. Since the time the deal was announced in April, Twitter’s shares have swayed like a pendulum.
In an interesting turn yesterday, the Delaware Court of Chancery ruled in favor of Twitter’s request for an expedited trial for the company’s lawsuit against the billionaire. In contrast to Musk’s plans to push the hearing further, the judge has granted a five-day trial in October, the first win for Twitter in the matter and perhaps a harbinger of better news to follow.
Nonetheless, amid all the chaos, TWTR stock has lost 7.4% year to date, compared to gaining 7.5% in the last five days following Musk’s backout. Twitter’s Board is determined to see the buyout deal go through as they perceive this as the best option since business headwinds do not support a standalone Twitter.
Analysts Hold TWTR on the Sidelines
Yesterday, Truist Financial analyst Youssef Squali cut the price target on TWTR stock to $43 (8.9% upside potential) from $50, while maintaining a Hold rating.
Squali is gloomy about the current digital advertising platforms’ trajectory amid the weakening macro, foreign exchange headwinds, ongoing war, tough comps, and the Musk buyout overhang.
Moreover, if Twitter fails to compel Musk for the takeover, its shares could only trade in the high $20 range, the analyst noted.
The other analysts on the Street also resonate with Squali’s pessimism and have a Hold consensus rating on TWTR stock. This is based on two Buys versus 20 Hold ratings. The average Twitter price target of $44.09 implies 11.6% upside potential to current levels.
Twitter’s Website Visits Portend a Sluggish Quarter
TipRanks’ Website Traffic Tool provides insight into Twitter’s performance ahead of its earnings. As per the tool, in Q2, Twitter’s website traffic recorded a 26.02% year-over-year decline in estimated global visits across all its devices. Similarly, the company witnessed a sequential fall of 16.95% in total estimated website visits. The month of June alone contributed to a fall of 26.21% compared to June of 2021.
However, year-to-date website traffic growth increased 26.43% compared to the same period last year.
Learn how Website Traffic can help you research your favorite stocks.
Ending Thoughts
Twitter’s second quarter is marred by negative sentiments on all fronts, whether it is Musk’s buyout debacle or the sluggish growth of advertising platforms. Currently, nothing seems to be favoring the social media platform except the courtroom battle with Musk.
Even hedge funds and retail investors are negative on TWTR stock lately with all the uncertainty surrounding the company’s future. A slow quarter is perhaps already baked into the current share price. The only thing that might impact the company now is the court’s ruling.
