Twitter needs to show some momentum ahead of Snap’s IPO

When Snap filed its IPO paperwork last week, the numbers looked an awful lot like the IPO of another high-profile social media company: Twitter.

There are plenty of similarities. Both companies are losing money, both are almost entirely ad-dependent and each needs to prove to investors that its user base can keep growing.

Snap’s business feels like Twitter’s, but Snap has more potential upside. Which leads to this: If your dollar is worth more as part of Snap than of Twitter, shouldn't you put your money there?

That’s a question investors may soon grapple with, and one that Twitter could put to rest — at least temporarily — with a strong financial showing when it reports earnings on Thursday.

Despite company-wide layoffs, Twitter beat Wall Street estimates last quarter. (Barely.) But it hasn’t been able to deliver consistent quarter-after-quarter success in years. Every time it feels as though the company might catch a break, it doesn’t. But now it has a chance to report two strong quarters in a row, just in time for Snap’s emergence on the stock market.

Twitter’s advantage is that it has a proven business. Sure, Snap is hot and exciting and young. But Twitter likely brought in more than $2.5 billion in revenue last year. The company has survived for a decade, and President Trump’s obsession with the product means it has never been more culturally significant.

Another Wall Street beat — a little momentum — is key to restoring some investor faith in Twitter before the shiny new Snap stock hits the markets.

Wall Street isn’t asking for much from Twitter, which reports Q4 earnings pre-market. Analysts are looking for profits of 12 cents per share on revenue of $740 million. That would be just a 4 percent year-over-year jump.

SunTrust’s Rodney Hull estimates Twitter will add just two million new users next quarter; RBC Capital’s Mark Mahaney is looking for three million new users. Twitter currently has 317 million users.

Also listen for the company’s revenue guidance moving forward without longtime sales boss Adam Bain at the helm. It refused to issue Q4 guidance because of restructuring inside its sales org last quarter. So whatever guidance it provides looking ahead to 2017 will be key.

This article originally appeared on Recode.net.

Will you support Vox’s explanatory journalism?

Most news outlets make their money through advertising or subscriptions. But when it comes to what we’re trying to do at Vox, there are a couple reasons that we can't rely only on ads and subscriptions to keep the lights on.

First, advertising dollars go up and down with the economy. We often only know a few months out what our advertising revenue will be, which makes it hard to plan ahead.

Second, we’re not in the subscriptions business. Vox is here to help everyone understand the complex issues shaping the world — not just the people who can afford to pay for a subscription. We believe that’s an important part of building a more equal society. We can’t do that if we have a paywall.

That’s why we also turn to you, our readers, to help us keep Vox free. If you also believe that everyone deserves access to trusted high-quality information, will you make a gift to Vox today?

One-Time Monthly Annual

$5/month

$10/month

$25/month

$50/month

Other

$

Yes, I'll give $5/month

Yes, I'll give $5/month

We accept credit card, Apple Pay, and Google Pay. You can also contribute via