Twitter’s lackluster Q4 earnings may puncture its ambitious targets for growth

Twitter today tried its best to spice up a lackluster fourth-quarter earnings report with some tasty nuggets—revenue rose 22%, to $1.56 billion! A total of $176 million in income! Daily active users are up 13%, to 217 million!

But it was hard to overpower the unappetizing parts: Revenue was less than analysts had been predicting. The income amounted to a 34% drop from one year ago. And the fact that 6 million new active users joined the platform in last three months of 2021 doesn’t look quite as impressive next to Twitter’s ambitious growth plan. Announced prior to Jack Dorsey’s unexpected departure in November, that goal was to add 100 million new users and double revenue by the year 2023.

Twitter also said today that it was authorizing a $4 billion stock buyback, a move that helped keep shares up (they in fact briefly rose by more than a point) amid otherwise at best mixed news. Two billion dollars’ worth of shares will be repurchased on “an accelerated timeline,” then the other $2 billion will be spread out over time. Twitter previously announced a similar $2 billion buyback in 2020. The company added that it expects to post another loss for Q1 2022, further complicating its hopes of doubling revenue by 2023.

Twitter’s increased revenue does suggest, however, that it’s endured Apple’s data-privacy changes better than other social-media giants. Apple’s new rules require them to ask explicit permission from app users in order to collect their data. It’s been a kick in the pants for Snap, which was downgraded by analysts recently only to bounce back after it posted a surprise profit. Meanwhile, Meta, Facebook’s parent company, saw its market value fall by $250 billion in one day this month. Although the reasons why were myriad, Apple’s privacy changes were a big part of it.

For Q1 2022, Twitter also estimates sales could hit $1.27 billion, outpacing analysts’ projection of $1.26 billion. It says it expects revenue growth for the year to be in the mid-20% range. This news plus the stock buyback announcement helped shares this morning, but still, for 2022 alone, Twitter stock has declined 12%, and it’s at nearly half of its value from six months ago.

On the earnings call, new CEO Parag Agrawal spoke about the company’s business growth strategy, and he said it’s the same as the old business growth strategy, just moving at a faster speed. “Our strong 2021 performance positions us to improve execution and deliver on our 2023 goals,” he noted in Twitter’s earnings statement. “We are more focused and better organized to deliver improved personalization and selection for our audience, partners, and advertisers.”