--> Shares of TWTR are down approx 18% in pre-market trade and are testing important gap up levels of support at $42.
Twitter: Color on qtr
- Topeka Capital notes, following what was supposedly a break-out 2Q, 3Q, was overall, an in-line quarter, and call commentary on 4Q guidance and on implied 4Q user growth was cautionary. For a stock trading at a high multiple, although supported by high growth, an in-line quarter and cautious comments are likely to result in share price volatility. Firm believes management is managing Street expectations and ad growth and user growth for 4Q are likely to exceed guidance. The pullback should be viewed as an opportunity to own the stock. PT reduces to $60 from $63.
- FBR Capital notes valuing Twitter is subjective given the company's early stage of development. As the company has continually acted on a solid strategic view and capable execution of revenue generation, firm's confidence in Twitter's long-term potential has been enhanced over the past year. On review of 3Q14 results and the roll-over of our price target to a year-end 2015 basis, Pivot now value Twitter at $42 per share.
- RBC Capital downgrades TWTR (To Sector Perform from Outperform). In order for TWTR to receive an Outperform rating, the company needs to prove two things: 1) That it can successfully increase its reach with advertisers -- very strong Ad Revenue growth over the last year and our survey results have provided clear evidence; and 2) That it can successfully increase its User base and Engagement levels -- here, the evidence is less clear. And that's the problem. After User trends improved in Q2 (U.S. MAU growth accelerated), they deteriorated in Q3 (U.S. MAU growth decelerated), and the Q4 Guide implies more deceleration, despite a much easier comp. Firm does not believe that TWTR is a broken story.
- Wunderlich Securities notes co reported Q3 revenues and EBITDA that were 3% and 16% above estimates, respectively. The company issued Q4 revenue guidance of 81-85% Y/Y growth, slightly below consensus, but higher on an absolute dollar number, and EBITDA guidance of 245%-251% Y/Y compared to consensus of 224% Y/Y. MAUs continue to be a concern, with the company adding 13 million in Q3, in line with consensus, but only implying growth of 6-7 million in Q4.