Will Twitter’s Earlier-Than-Usual Earnings Signal a Turnaround?

Twitter logoEmbattled social media giant Twitter Inc (NYSE:TWTR) will deliver its latest earnings report before the opening bell tomorrow. Here’s a preview of what investors can expect.

The big news over the past few months with Twitter has been a string of takeover rumors that ultimately amounted to…absolutely nothing. A who’s-who of tech and media companies were linked to a potential acquisition, including Salesforce, Google, Verizon, Apple, Disney, and even former Microsoft CEO Steve Ballmer.

Most of those bidders wound up dropping out early on, and Salesforce ended its pursuit soon thereafter. Twitter shares tanked to all time lows as a result.

The only remaining suitor could be Japan’s Softbank, although those rumors are mostly still speculative and haven’t been substantiated yet.

After failing to find a buyer, Twitter has turned once again to aggressive cost-cutting measures, including more layoffs, in order to drive bottom-line growth. CEO Jack Dorsey is reportedly on a short leash with the company’s board of directors, and he’s under pressure to deliver some sort of positive news in the company’s upcoming report.

Speaking of that report, Twitter inexplicably changed the time of its release to before the market open tomorrow, rather than its usual slot after the closing bell. That move alone could be an omen that results are going to be even worse than anticipated. With much of the tech world centered on the west coast, pre-market earnings will be released at 4:00am Pacific Time — when many technology-focused investors are still asleep.

Wall Street is looking for EPS of $0.09 from the company for Q3, which is a 10% decline from last year, on revenues of $606.4 million, which is mostly flat from the year-ago period. Analysts at Zacks Research are fairly bullish on the stock heading into earnings, noting:

Twitter is seeing favorable earnings estimate revision activity as of late, which is generally a precursor to an earnings beat. After all, analysts raising estimates right before earnings—with the most up-to-date information possible—is a pretty good indicator of some favorable trends underneath the surface for TWTR in this report.

In fact, the Most Accurate Estimate for the current quarter is currently at a loss of 14 cents per share for TWTR, compared to a broader Zacks Consensus Estimate of a loss of 15 cents per share. This suggests that analysts have very recently bumped up their estimates for TWTR, giving the stock a Zacks Earnings ESP of 6.67% heading into earnings season.

Even more important than Twitter’s Q3 results will be its Q4 forecast (assuming it provides one), and its user growth (or lack thereof). The company is hoping new offerings like streaming NFL football games can help drive new users to the platform and increase engagement from existing users. The initial feedback from these streams has been positive, so it’ll be interesting to see if they’re beginning to have any material impact yet.

Regardless, investors can expect fireworks tomorrow morning when Twitter reports, as the most interesting platform that no one seems to want opens its books.

Twitter shares were mostly flat in Wednesday morning trading at $17.25. Year-to-date, TWTR has fallen 25.02%, compared with a 4.54% rise in the benchmark S&P 500 index during the same period.