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Elon Musk’s offer to buy Twitter is $54.20 per share.
Amy Osborne / AFP via Getty Images
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posted a first-quarter earnings beat on Thursday, but revenue came in below expectations.
Shares rose 2.2% to $49.68 — not that it matters much since Elon Musk plans to take the company private.
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(ticker: TWTR) reported adjusted earnings of 90 cents per share on $1.2 billion in revenue. Analysts polled by FactSet predicted the company would report adjusted earnings per share of 5 cents on sales of $1.23 billion. The company’s previous outlook from February called for sales of $1.17 billion.
Advertising revenue rose $1.11 billion, a 23% increase, offset by a 35% increase in costs and expenses. Average daily active cash usage was 229 million, up 15.9% quarter-over-quarter, the company said. Average US MDAU was 39.6 million for the quarter.
Twitter had already said it does not plan to hold a conference call to discuss the results and added Thursday that it would not provide guidance in light of Musk’s acquisition. The early morning release of the report differed from the approach taken by peers and other major technology firms that generally reserve results after the market close or early afternoon on the West Coast.
Musk’s offer is $54.20 per share. Assuming you believe the deal will go through, there’s no reason for the stock to trade above that mark. Of course, with shares trading at around $48, merger arbitrage traders may be a little skeptical that it closes.
Piper Sandler analyst Thomas Champion speculated earlier this week that the deal could be a negative sign heading into the report. For months, investors had questioned whether the company could meet the ambitious user growth and revenue targets for 2023 it set last year.
“For Twitter, this could present an unpleasant reality,” Champion wrote. “It seems unlikely that the FY23 financial/user targets, set at the analyst day the year before, will be achievable. While there may have been a recent engagement benefit from world events, the decision suggests that 1Q results may have come in weaker than expected.
CFRA’s Angelo Zino reiterated a Hold rating on Twitter shares after the company posted results on Thursday. Zino maintained a $54 price target, which reflects Musk’s offer.
“We believe the results along with continued ad industry headwinds strengthen the Board’s decision to approve Musk’s offer, as we see little reason to believe TWTR can deliver the greatest value to remaining public shareholders ,” he wrote.
Musk himself may or may not be intrigued by the first quarter results. He hasn’t tweeted anything as of early Thursday afternoon. The billionaire had turned down a chance to look at Twitter’s non-public finances, Bloomberg reported, citing people familiar with the process. Go figure.
Write Connor Smith at [email protected]
