Daniel Ives: Twitter active user falloff 'better than feared'

"When compared to the nightmare quarter of SNAP last night, it shows digital ad spending is not falling off a cliff."

From a note to Wedbush clients that landed on my desktop Friday:

This morning Twitter reported its June results with no conference call given the pending Musk deal/October Delaware court battle. 2Q22 revenue came in at $1.18 billion (down 1% y/y) vs. the Street's $1.32 billion expectation due to the advertising industry slowing down and high uncertainty due to the pending lawsuit with Elon Musk.

2Q average mDAUs [million Daily Active Users]came in at 237.8 million vs the Street's expectation of 238.1 million as the average US mDAUs came in at 41.5 million (up 15% y/y) and average international mDAU came in at 196.3 million (up 17% y/y).

Overall we would characterize the DAU metrics as better than feared and holding up relatively firm in this environment. When compared to the nightmare quarter of SNAP last night, it shows digital ad spending is not falling off a cliff like feared which is a positive for others in the space such as Facebook, Pinterest, and Google.

Adj. EBITDA of $111.7 million was well below the Street's consensus of $288.0 million while non-GAAP EPS of ($0.35) was well below the consensus estimate of $0.14. We note costs related to the Twitter acquisition were $33 million in the quarter.

The stock will continue to trade at fair value plus the odds of a deal or settlement with Musk as the court case in Delaware looms in October. We believe Twitter has a clear upper hand legally speaking as the Street is now factoring in at a minimum a major cash settlement from Musk into the stock ($5 billion-$10 billion range) or potentially Musk ultimately still buying Twitter at the $54.20/$44 billion if the Delaware court upholds this deal.

Maintains NEUTRAL rating.

My take: Results delivered without a conference call is a bad look.

13 Comments

  1. TWTR is off ~2% SNAP down 32% but I do not trust pre-market trading. Each are dependent on an ephemeral service & related advertising/hype. FB/Bitcoin-like as an investment. Telegram, TikTok or ? could become dominant in any given market or demographic. A large platform could give users more control over Privacy and reduce the invasiveness of online advertising they depend on.

    2
    July 22, 2022
  2. Jerry Doyle said:
    Jacob Carpenter reported in “DataSheet” that “digital ad spending may not be falling.” Competitors are losing share to “TikTok!”

    TikTok has a mDAU base over 1B now whereas Snap & Twitter reported a combined 585 million daily active users this past quarter. The reports say that Snap & Twitter don’t command & hold “eyeballs” for nearly as long as TikTok where recent analysis by “Similarweb” suggested that TikTok users spent an average of 1 hour & 22 minutes daily on the app in March, far more than users of Snap (19 minutes) and Twitter (23 minutes).

    In summary, the economy seems to be moving fairly well. It’s competition most likely in this instance. Will be most interesting to hear what Cook & Maestri have to say next week about the state-of-the-economy.

    0
    July 22, 2022
  3. Hap Allen said:
    On the recommendation of Horace Dediu, I subscribed to the Tweetbot app. It ‘cleans up’ the Twitter interface beautifully.

    What the destiny of that app might be in the future is an open question.

    1
    July 22, 2022
  4. John Butt said:
    Jacob Carpenter’s Datasheet covers the links between twitter, snap and TikTok with todays release which includes this gem “ Social media platforms might have weathered that disparity better in the past through superior advertising technology, but Apple’s operating system privacy changes last year have forced companies to re-engineer their targeted marketing systems.”

    PEDs Journo nose is still in great condition, may it remain so.

    1
    July 22, 2022
  5. David Emery said:
    Too bad, I’d like to see Twitter die the death I think it deserves. I always thought it was A Bad Idea.

    But I’d rather see Meta meet its end first, while I get to make wishes.

    2
    July 22, 2022
    • Steven Philips said:
      Yeah, I was going to post that a lower falloff of twitter users was not – to my mind – better.

      0
      July 23, 2022

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