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Twitter Earnings Report: All That Really Matters Is The Active User Number

Twitter Earnings Report: All That Really Matters Is The Active User Number

Twitter will release its Q1 2014 earnings report after the closing bell today (Tuesday), and while the market will be looking for growth in revenue, a strong earnings per share (EPS) number and a boost in ad sales, only one metric really matters: monthly active users (MAU).

In their first post-IPO earnings report (for Q4 2013), Twitter beat analyst expectations for revenue and EPS, but posted an MAU uptick of just 9 million users from Q3 2013 to 241 million monthly actives. Subsequently, the stock tanked.

Here’s my chart, showing Twitter MAUs from Q3 2012 to Q4 2013.

Twitter Earnings Report: All That Really Matters Is The Active User Number

And another that I put together, showing how Twitter’s active user month-on-month growth has fallen sharply since Q1 2013.

Twitter Earnings Report: All That Really Matters Is The Active User Number

Twitter’s shares are already weak going into today’s report, so if that MAU number is flat the price could fall sharply. Personally I think that any number less than 10 million is a problem for Twitter. An MAU total about 250 million is probably marginally bullish as it’s both a milestone and a sign that there’s still growth potential.

Analysts are forecasting $241 million in revenues and an EPS loss of $0.03.

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