As corporate earnings season starts to come to a close, twitter blows away investors with revenue and confirms a rumor that’s been spreading around the internet; Twitter and Google will be working together even more than they already do. So, today we’ll go over the earning report, the confirmation of team Twitter & Google, and chat about what I think we’ll see in Twitter and Google stock prices moving forward.
Twitter’s Q4 Earning Report
Overall, it’s the Q4 report released after hours Thursday by Twitter was great. We all know that revenue is the bottom line, and they definitely blew expectations away there. On the other hand, they did raise a big red flag with regard to users.
- The Bottom Line – As mentioned above, when it comes to earnings, Twitter absolutely blew away expectations. Revenue was up 97% in the fourth quarter; weighing in at $479 million. Experts only expected to see Twitter get to $453.6 million in 4th quarter revenue. All in all, investors earned $0.12 per share; doubling analyst expectations.
- The Red Flag – Twitter is clearly struggling to bring in new users. On their Q4 call, Twitter did their best to explain away the fact that they only added new users at a rate of 1% in Q4; about 4 million new users. This seems to have caused some investors to ask the question, “Is Twitter too big to grow?” Personally, I don’t think it is, I just think that twitter will need to come up with an updated user acquisition strategy.
All in all, the struggle with new users is a concern and may have slowed growth in the company’s stock value a bit. However, overall the stock is up! The bottom line is that investors care about earnings and an asset’s consistent ability to continue to grow their earnings. Not to mention, they’ve got a big trick up their sleeve already to increase user count.
Twitter Gives Google Access To The Firehose
Twitter’s Firehose feed is a data feed that displays all of the most recent tweets, statuses, and much more. It was designed for developers; however, developers have to have special permissions to access the data. For the most part, Google hasn’t had access to this feed in the past. They did one time back in 2011, but twitter discontinued the program in fear that it would reduce their own feed views.
Recently, rumors have been spread around the internet that Google will have access to Twitter’s Firehose feed. However, the stories were all speculation until Thursday. During Twitter’s Q4 call, they announced that they have reached an agreement with Google and will be providing access to the Firehose.
What This Means For Twitter
- More Log Ins – When users who are not currently logged into Twitter see the results in Google search, they will be more likely to log in. This will create more user engagement throughout the social network as a whole.
- More Sign Ups – If you’re a Google fan and you’re not currently on Twitter, chances are that after you see so many twitter results in Google search, you’ll want to become a Twitter user as well.
- More Revenue – We all know that Google is the biggest search engine on the internet today. With that said, being featured prominently in Google’s results is sure to increase revenue for Twitter.
What This Means For Google
- More Data – Google is a company driven by data. To provide the best search results, they need to provide high quality data in real time. Working with Twitter’s Firehose feed, Google now has access to real time data that tells them where the stories are that consumers care about most; ultimately increasing the overall user experience.
Twitter & Google Stock Prices Moving Forward
As rumors came out about Google’s access to the Firehose, investors started to get excited and both companies experienced a bit of a rise in their stock prices. That rise continued Friday as positive earnings from twitter were reported and news of the deal between the two companies being confirmed began to surface.
Based on strong earnings and the deal with Google, I think Twitter’s stock price is going to continue on an upward trend. Also, as far as Google goes, I’ve always been a huge fan; so, I think this deal just solidifies the fact that Google will continue to find more ways to grow.
What Do You Think?
Do you follow tech stocks? What do you think will happen in the prices of Google and Twitter moving forward?