Twitter Inc (NYSE:TWTR) Tweets A Solid Q2, ETFs Jump

Twitter1Twitter Inc (NYSE:TWTR) delivered an astral performance with its third public earnings announcement, this time for Q2. Unlike its two prior earnings releases, the company saw a surge in its share price as the social networking site earned the tag of a profit-making company (excluding the stock-based compensation expense) this season. A more-than-double gain in revenues and an optimistic outlook also played their roles in pushing the stock northward.

Q2 in Detail 

The company’s second-quarter 2014 adjusted loss per share (including the stock-based compensation expense) of 23 cents surpassed the Zacks Consensus Estimate of 28 cents of loss. Excluding the stock-based compensation expense, the company earned 2 cents earnings per share.

Revenues grew a whopping 124% year over year to $312 million breezing past the Zacks Consensus Estimate of $280 million.
Investors should note that much of Twitter’s quarterly success is credited to the FIFA World Cup. The mega event spurred users across the globe to tweet frequently. Twitter took care of many features to serve soccer fans including real-time scoring, push notifications, event and match timelines and a voting ballot.

The company finished the quarter with an average 271 million monthly users, up 6.3% quarter over quarter and about 24% year over year. Advertising revenue per thousand timeline views doubled to $1.60.  As much as 81% of Twitter’s advertising dollars came from mobile advertising. Growth in international revenues remained extremely robust at about 168%. Notably, international revenues account for one-third of total revenue.

The outlook was enthusiastic too. Twitter anticipates that its total revenue for 2014 will range between $1.31 billion and $1.33 billion (up from $1.20 to $1.25 billion). Prior to this, the company raised its full-year revenue outlook from $1.15 to $1.20 billion to $1.20 to $1.25 billion.

Market Impact

After continuous underperformances, this turnaround cheered investors as the stock traded in green after market close. Following the earnings release on July 29 after the closing bell,
Twitter shares advanced about 30% on about double the regular volume. Investors had probably sensed the beat before hand as shares rose 1.74% during the day’s key trading session.

Twitter does not have sizable exposure in the overall ETF world with only two ETFs –Renaissance IPO ETF (NYSEARCA:IPO) and Global X Social Media Index ETF (NASDAQ:SOCL) – having, , 9.4% and 3.8% exposure respectively at present. Such a huge run-up in one of the major components impacted the IPO performance in yesterday’s trading. IPO shares jumped 13.4% after hours even while the broader market was soft. SOCL too climbed 4.68% in the same trading session following Twitter’s massive gain.  Below, we have highlighted these two funds in detail.

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