Twitter report a critical test

TWITTER was due to release its first earnings report since a wildly successful stock offering yesterday‚ in what is being seen as a critical test for the popular messaging platform.

Shares in Twitter have soared from the offering price last November of $26 (R290)‚ and analysts say to sustain that momentum Twitter must prove it can grow and move towards profitability.

Twitter shares rose 1.6% to $66.32 (R741), their highest level since December.

Because Twitter has never delivered a profit‚ analysing its value is a tricky task.

Wall Street expected Twitter to report continuing losses in the fourth quarter. But analysts would be scrutinising the results for gains in advertising revenues‚ Twitter's user base and other metrics that measure "engagement"‚ or how people use the platform.

Mark Mahaney at RBC Capital Markets remained upbeat with an "outperform" rating on Twitter.

"We remain positive on Twitter's ability to become one of the web's leading utilities (alongside Google‚ Amazon‚ Facebook)‚" he wrote in a note to clients.

"Twitter has displayed very robust growth in key metrics‚ and we have confidence this momentum can continue as the company develops its advertising platform."

Twitter has fast become engrained in popular culture but must still convince investors of its business model‚ having lost more than $440-million (R4.9-billion) since 2010. – AFP