Twitter to generate $0.06 billion less in mobile advertising revenue for 2017

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It’s all about the numbers with Twitter, and they simply don’t add up. The recent performance of the stock has resulted in a discouraging trend forming. From February 2017, the price of Twitter moved sharply lower than both its 50-day moving average of $16.56 and it’s 200-day moving average of $17.74. This grim reality is a portend of what’s to come for this once-thriving tech stock. Twitter is trading at $15.31 per share, up a paltry 0.62% on the day, or $0.10.

It is somewhat surprising that the actual earnings have bested estimates from Q1 through Q4 2016, yet the stock has plunged relentlessly. Revenue at Twitter consistently increased between 2014 and 2016, from $1.4 billion to $2.53 billion. Earnings have also improved from $-577.82 million to $-456.87 million. While these numbers leave a lot to be desired, they paint an improving picture for Twitter. On the flipside, binary options traders will not be happy with the price/earnings ratio of -23.56, or the EPS of $-0.65. These metrics do not inspire confidence in a stock that was once flying high on talk of a buyout, or takeover towards the end of 2016.

How should binary options traders react to Twitter’s performance?

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If recommendation ratings are anything to go by, Twitter is certainly not a bullish prospect. Between December 2016 and March 2017, Thomson Reuters analysts have increasingly shifted their forecasts from a hold rating to an underperform rating on the stock. On a scale of 1.0 (strong buy) to 5.0 (sell), Twitter is now at 3.3 between hold and underperform. The stock has consistently been downgraded in 2017, with strong negative ratings from major financial institution such as Raymond James, and Citigroup, Atlantic Equities, Loop Capital, UBS and most recently Deutsche Bank. Given the pervasive negative sentiment, it behooves binary options traders to go short on the stock with put options. Remember, Twitter stock slacked 7.9% since the latest quarterly earnings report a month ago. It is struggling to hold its proverbial head above water, and traders have followed the age-old axiom – the trend is your friend.

What about Twitter’s advertising business? How is it expected to perform in 2017?

In 2016, Twitter generated advertising revenue from its mobile division of $1.21 billion. Guidance for 2017 estimates advertising revenue of $1.15 billion. This is a significant decline of $0.06 billion for a company that is struggling to make ends meet. In terms of Twitter’s overall share of the mobile advertising industry in the US, Twitter now accounts for just 2% for 2017, as opposed to 2.6% during 2016. Statistics research company eMarketer provided the information. This is also the first time in Twitter’s short history that eMarketer has forecast a decline in the tech company’s mobile advertising revenue.

In February 2017, Twitter announced its quarterly earnings report. In the 1-month since the release of that data, the company’s share price is down almost 8%. Q4 2016 earnings came in at -$0.03 per share, better than the negative $0.11 per share anticipated by Zacks analysts. While the EPS figure was better than forecast, the actual earnings were worse. Zacks had a consensus estimate of $737.7 million for Twitter, but the actual figure was $717.2 million. The decline in year on year advertising revenue is a source of concern for the company, and it is the reason investors are bailing on the stock, despite its popularity among celebrities and the US president.