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Twitter, Inc. (TWTR) Stock Undergoes Minor Volatility as Bleak Financial Outlook Continues

Twitter, Inc. (TWTR) stock prices were down by a marginal 0.48% as of the market closing on May 21st, 2021, bringing the price per share down to USD$54.45 at the end of the trading day. Subsequent pre-market fluctuations saw the stock fall by 1.12%, bringing it down to USD$53.84.

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Revenue Reports

The company reported USD$1.04 billion in revenue for the first quarter of the fiscal year 2021, indicating a 28% increase as compared to the same time period of the prior year. Expenses for the fiscal quarter amounted to USD$984 million, a 21% increase on the numbers reported for the first quarter of 2020. While Q1 2020 reported USD$7 million in operating income and a negative 1% operating margin, the first quarter of 2021 reported an operating income of USD$52 million and an operating margin of 5%.

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Fiscal Performance Improved

Of the total revenue reported by TWTR, 11% consisted of stock-based compensation, amounting to USD$111 million. This indicates a 13% increase over the numbers reported in the same quarter of the year prior. Q1 2021 also saw a net income of USD$68 million with a margin of 7%, comparable to the net loss of USD$8 million reported in Q1 2020 with a net margin of negative 1%. The diluted EPS of negative USD$0.01 reported in Q1 2020 was up to USD$0.08 in the first quarter of 2021.

Additional Financial Comparisons

In ongoing efforts to facilitate audience growth and product innovation, TWTR has made significant infrastructure investments in data center build-outs. This has pushed the capital expenditures of USD$121 million for the first quarter of 2020 up to USD$179 million for Q1 2021. Net cash provided by operating activities was also up from USD$247 million reported in Q1 2020, as compared to the USD$390 million reported for Q1 2021.

Financial Forecast for TWTR

With such strong numbers being reported, TWTR has forecasts of sustained growth through the second quarter of 2021. The company anticipates generating between USD$980 million and USD$1.08 billion in total revenues in Q2 2021, with a GAAP operating loss between USD$170 million and USD$120 million. For the full year 2021, TWTR expects roughly USD$600 million in stock-based compensation expenses, with capital expenditures ranging from USD$900 million to USD$950 million.

Aftermath of a Stellar Year

While the company warns investors that a rapid deceleration of growth is to be expected after such a stimulated 2020, TWTR also has ambitious plans to double its revenues by 2023. They announced in February of 2021 their aim to expand their user base and accelerate the deployment of new features in order to reset their product after years of stagnation.

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Future Outlook for TWTR

Investors are shying away from the tepid forecasts of the upcoming few months in comparison to the excitement of the past several quarters. Nevertheless, TWTR has the resources at its disposal to resuscitate interest in their social media platform, with current and potential investors hoping for the company to leverage those resources and usher in significant and sustained increases in shareholder value.

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