Twitter, Inc (TWTR) stock climbs on new share buyback plan

February 10, 2022 10:28 AM PST | By Rupam Roy

Twitter, Inc (TWTR) stock climbs on new share buyback plan — Image source: Pixabay, Pexels

Fourth-quarter earnings and guidance

The company reported revenue of US$1.57 billion in Q4, FY21, an increase of 22% from the year-ago quarter. The company said in a release that it added six million new users in the final quarter of fiscal 2021, bringing the average daily active users to 217 million, up 13% YoY.

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Both the segments fell short of the estimates. Its net income came in at US$181.69 million, or US$0.21 per diluted share in Q4, FY21, compared to US$222.11 million, or US$0.27 per diluted share in the same quarter of the previous year.

It expects the revenue to grow in the low-to-mid-20% range in 2022.

The company now expects its revenue to be between US$1.17 billion and US$1.27 billion in the first quarter of FY22, falling short of estimates.

For the full year, it expects the revenue to grow in the low-to-mid-20% range.

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Twitter (TWTR) reported weaker-than-expected fourth quarter earnings results on Thursday

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Reasons for the lackluster revenue forecast

According to Twitter CFO Ned Segal, the company's weaker-than-anticipated guidance is due to the recent sale of its advertisement platform MoPub, which contributed US$281 million in revenue in 2021, including US$51 million in the first quarter. Twitter sold the ad platform to AppLovin Corp. for US$1.05 in a cash deal that closed on January 1.

However, Segal said the company could "make up" some of the MoPub-related losses in 2022 and entirely by 2023.

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Impact of Apple’s privacy policy changes

The company said that Apple’s (AAPL) privacy policy changes would have a "modest" effect on its business. The policy had impacted Meta Platform Inc's (FB) profit in the last quarter.

But unlike Meta Platform's Facebook and Snap Inc., Twitter mainly focuses on a brand advertisement that requires less targeting of market data. However, it may still impact profit in its advertising business moving forward.

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What’s next for Twitter?

The company announced a new plan to buy back US$4 billion shares, besides the US$2 billion repurchase program declared in 2020. The stock was up 4.55% to US$39.55 at 8:30 am ET from its previous close at US$37.83. The buyback plan shows its confidence in the business, which may have relieved investors after weaker-than-expected results and guidance.

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Meanwhile, the social-media company said it made "meaningful progress" towards its target of achieving 315 million users and US$7.5 billion annual revenue by 2023 end. Additionally, the company added that user growth is expected to accelerate this year globally. It also focuses on big projects like audio chat rooms and newsletters to attract more users and advertisers.

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Bottomline

Twitter has entered a new chapter after its co-founder Jack Dorsey has unexpectedly resigned from the CEO role in November. Following that, its former CTO, Parag Agrawal, took the top job. The company still faces pressure to move faster in developing new products. Its stock value tumbled 44.18% over the past 12 months.

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