Several tech titans will report earnings this week, with Twitter’s earnings call being one of the most anticipated. Twitter (NYSE: TWTR) will release its FY22 Q1 earnings results before the market opens on Thursday.
On Sunday, Twitter’s 11-member board of directors met to discuss Elon Musk’s offer to private the company. Mr. Musk believes that Twitter will be able to sponsor free speech only by going private. Twitter must reach an agreement with Musk; many shareholders may support him in a tender offer, even though the company has prevented its shareholders from tendering their shares through a poison pill strategy.
After Musk made his offer, Twitter implemented a poison pill to prevent him from increasing his more than 9% stake in the company to 15% without first negotiating with its board. Musk has responded by threatening to launch a tender offer to gain Twitter shareholder support for his bid.
By the time Twitter reports quarterly earnings on Thursday, the board of directors is expected to conclude that Musk’s all-cash offer of $54.20 per share is too low. Given its growth prospects, few of Twitter’s shareholders believe the company should try to entice Musk with a better offer.
“I don’t believe that the proposed offer by Elon Musk ($54.20 per share) comes close to the intrinsic value of Twitter given its growth prospects,” Saudi Arabia’s Prince Alwaleed bin Talal, a Twitter shareholder, tweeted on April 14.
Twitter shares were trading at $49.73 in premarket Monday, a significant discount to Musk’s offer that reflects the uncertainty surrounding the fate of his bid. After a few minutes of publishing, the TWTR share rose 5.1% to $51.
It will be interesting to see how Musk’s Twitter takeover attempt plays out before the earnings report. Twitter is expected to report EPS of $0.05 on $1.22 billion revenue, earnings outlook for the current quarter, and announcements as the main highlights of the upcoming earnings.
CNBC’s Jim Cramer said that if Twitter doesn’t announce a new feature or initiative, Elon Musk “should go full corporate raider here and go after Twitter by any means necessary.”
On February 10, 2022, Twitter reported earnings for the fourth quarter of 2021, which fell short of analysts’ expectations. It reported adjusted earnings per share of 33 cents, compared to 35 cents expected, on revenue of $1.57 billion, compared to $1.58 billion expected. Furthermore, it reported Monetizable Daily Active Users (mDAUs) of 217 million versus the expected 218.6 million.
The company forecasted revenue for the next quarter ranging from $1.17 billion to $1.27 billion, compared to analysts’ expectations of around $1.26 billion.
In addition, Twitter announced a new $4 billion share repurchase program. According to the company, half of that will be accelerated share repurchases, with the remainder repurchased over time.
The company’s shares rose initially in response to the report and continued to rise during its earnings call in premarket trading. However, they fell 2% in extended trading that day.