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Twitter Earnings Reveal Larger Issues for TWTR Stock

By U.S. News & World Report

Twitter (ticker: TWTR) reported second-quarter earnings on Tuesday, and investors were not impressed. TWTR stock plunged 12 percent as Wall Street lamented a revenue miss and exceptionally poor third-quarter revenue guidance.

The problems are manifold, but the most glaring issue is slowing revenue growth as Twitter struggles to get advertisers to devote meaningful shares of their ad budgets to the social network.

Year-over-year revenue was up 20 percent to $602 million, missing expectations for $608 million. That growth rate was also sharply lower than last quarter, when TWTR grew revenue by 36 percent.

But investors, by their nature, are forward-looking — and that’s where Twitter really dropped the ball. Its guidance for third-quarter revenue between $590 million and $610 million, well below the $682 million analysts were hoping for.

[See: 10 Tips for Couples and Young Families to Build Wealth.]

While adjusted earnings per share came in at 13 cents, 3 cents higher than the Wall Street consensus, the revenue shortfalls were simply too much to overlook.

Simply put, Twitter is stuck between a rock and a hard place, and it hasn’t proven that it can wiggle its way out.

With Alphabet (GOOG, GOOGL) and Facebook (FB) gobbling up the lion’s share of digital advertising dollars, Twitter is left fighting for scraps against much larger and better-funded competitors. Microsoft Corp. (MSFT), which owns Bing and MSN, also competes there, and with Yahoo (YHOO) being absorbed into Verizon Communications (VZ), which also owns AOL, those scraps don’t come easy.

Twitter CEO Jack Dorsey understands this problem, and at the moment seems content not to solve it. Instead, he’s trying to turn Twitter to a more video-centric platform, inking deals with the NFL, NBA, NHL, MLB, Wimbledon, and even the Republican and Democratic National Conventions to live-stream events on the social network.

“The only silver lining appears to be their bet on live-streaming sports, but can the company really wait a few months for those games to kick in?” says James Gellert, CEO of Rapid Ratings, a financial health ratings firm. “Long term, this could be a good strategy for them, but they may have to continue to spend money to show any ROI.”

In going after live video, Twitter aims to go after traditional TV advertising budgets. There’s only one problem: Facebook and Google have the same idea, and Twitter’s efforts don’t seem to be catching on.

While Twitter was sure to emphasize how important video was going to be in its evolution, it also carefully hedged its language. “It will take time for marketers to understand the impact of video ads on mobile vs. the alternative. To unlock budgets, we will also need to launch additional features and functionality over the next few quarters,” it cautioned in its Q2 letter to shareholders.

[See: 10 Ways to Play in the Asia-Pacific Stocks Pool.]

K C Ma, finance professor at Stetson University in Florida, has his doubts.

“Twitter has struggled and failed to grow their user base over the years by strategically shifting from fix the product and revenue will come to build a live mobile video business. We think the change seems too late and too little,” he says. “We worry that the real-time streaming space is already over saturated that eventually everyone will do it.

There are other problems, too.

Perhaps most notably, user abuse on Twitter has reached a fever pitch; recently, “Ghostbusters” and “SNL” star Leslie Jones said she was quitting the service after receiving a barrage of racist and sexist tweets from online harassers.

Twitter identified safety as one of the five areas it would focus on this year in its shareholder letter. However, the letter also touted the improved ability to block other users as a meaningful achievement, despite the fact that blocking is woefully inefficient in high-volume attacks by largely anonymous users, like the one directed against Jones.

It’s little wonder that Twitter’s user growth remained a glaring issue in the second quarter, as the company grew its monthly active users just 3 percent from last year to 313 million. Twitter’s tepid user growth has been one of the company’s most noticeable weaknesses, and investors have no reason to believe that will change anytime soon.

Analysts are taking a decidedly bearish tone on Twitter after its latest quarter. Canaccord Genuity, Axiom Capital, and Cantor Fitzgerald all downgraded TWTR stock from buy to hold, and Stifel, Wedbush, and RBC Capital Markets each lowered their price targets.

Twitter has a lot on its plate: Attracting TV ad budgets, stamping out user abuse, reigniting user growth and generally jump-starting revenue growth is no small task. But if Twitter doesn’t want to end up like Yahoo — a largely irrelevant digital property that couldn’t fend off the dominance of Facebook and Google — it needs to address all these issues pronto.

[Read: 5 Smart Investment Moves to Make Before Marriage.]

If it doesn’t, TWTR’s post-earnings meltdown may pale in comparison to longer-term underperformance.

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Twitter Earnings Reveal Larger Issues for TWTR Stock originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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