After a whirlwind month of acquisition rumors, Twitter is back off the market and focused on executing strategy once again. The San Francisco social media company is set to deliver its latest quarterly results on Thursday, and investors are eagerly waiting to see if a live streaming strategy has succeeded in attracting new users or spurring revenue growth.
But as is usually the case with Twitter, things are already off to a rough start.
Ahead of the earnings, the company has been reported as planning another round of layoffs that could see Twitter lose 300 employees, or about 8 percent of its workforce. The cuts could be announced before the earnings on Thursday, Bloomberg said.
"Clearly the company is under serious pressure and, if you read between the lines, that probably means they had another crummy quarter," said Dean Rogers, portfolio manager at Analyze Wall Street, an advisory firm.
This is Twitter's second round of layoffs since Co-founder Jack Dorsey returned as CEO one year ago. At that time, Twitter laid off 336 employees.
News of this latest round of job cuts also follows a roller coaster October in which Twitter was reportedly shopping itself to interested buyers. Reports said Salesforce, the Walt Disney Company and Google were all intrigued by a potential Twitter acquisition, but ultimately, the three companies declined to follow through on the idea.
Talk of a sale pushed Twitter's stock price as high as $24.87--the highest it's been in all of 2016--but the price quickly came crashing down following a report describing Dorsey as having "either ceded or lost at least some control over the future of the company he helped create." Shortly after, reports came out saying no companies were interested in buying the tech company. Since then, Twitter's stock price has fallen more than 30 percent.
"The fact that these companies looked at it and passed means that Twitter is valued too high to justify an acquisition to its own shareholders," said Sander Read, CEO and chief investment officer of Lyons Wealth Management.
Also eye-brow raising is the timing Twitter has planned for the release of its earnings results. The company said it will announce the numbers at 7 a.m. EDT with a conference call to follow an hour later. It's an unprecedented move for the 10-year-old company, which normally releases its quarterly earnings and holds conference calls after the market close at 4 p.m. EDT. Explaining the decision, Twitter said it decided to reschedule its call as "to avoid overlapping with several other earnings announcements in the Internet sector scheduled for Thursday afternoon." Amazon and Google parent-company Alphabet will also release results that day.
The move may simply have to do with logistics, as Twitter said, "but a company in Twitter's spot suggests distress," Rogers said.
About the only positive Twitter has experienced in the past three months has been the launch of its live-streaming strategy. Twitter began showing Thursday night NFL games to its users in September. Twitter also live streamed all four of the general election debates, using them as a way to encourage users to post their voice their political opinions on the service.
"They're really doing a great job on the video," said Jason Moser, an analyst for Motley Fool. "It's playing into the notion that now we really do have a TV in our pockets in the form of a cell phone. We'd love to see them build off of that success."
Twitter's plan is to use video of live events as a way to draw in more users and advertisers. This network's user growth has stalled for the past two years while revenue growth has been on a decline.
"With the elections and people's political opinions flying at full force, you actually could see a user and revenue spike for Twitter," Read said. "Though Twitter has had its struggles, it's in the right place for the overall trends for online media."
Unfortunately for Twitter, many of the NFL games and election debates it showed were in October, after the close of its latest quarter. That means a significant impact of those live streams will not appear in its quarterly results. The company, of course, could share some of that data in its earnings call.
"It would categorically be a win of we saw significant user growth, but I don't expect to see that," said Jeff Reeves, analyst and executive editor at InvestorPlace.com. "It would be nice, I suppose, if we saw significant revenue growth, but I honestly don't expect that."