Twitter’s (NYSE:TWTR) steep drop after the Q3 earnings report may get value investors interested in the stock again. The decline erases more than half of the uptrend the social networking site built in 2019. With revenue up 8.7% Y/Y but non-GAAP missing consensus estimates, investors should considering buying on the dip.
Twitter reported non-GAAP EPS of $0.17 and GAAP EPS of $0.05, both of which missed analyst expectations. But the market should keep its eye on DAU (daily active user) numbers, a metric that predicts current and future growth. Still, Twitter lowered its Q4 guidance. It sees revenue of $940 million - $1.01 billion.
In Q3, nearly half of the 19 million daily customer additions contributed to the refinement on the site. This resulted in a DAU of 145 million. But July and August had a technical hiccup: map technology stacks and seasonal weakness in July to August hurt results. So, even though Twitter collected user preferences but did not abide by those settings, the glitch is now fixed. Adding 20% more headcount should accelerate innovation on the site and avoid any technical issues like those faced in Q3.
Takeaway
Twitter benefited from some rebound in September. This momentum should continue in the current quarter and into next year. DAU grew in the double-digits in all 10 of its 10 top markets. This will create success opportunities, leading to a rebound in Twitter stock.
