Taking a look at the most recent numbers from the 8-K report, 2016 revenue totaled $2.5 billion, which is an increase of 14% year-over-year. 2016 GAAP net loss of $457 million and non-GAAP net income of $406 million. 2016 adjusted EBITDA came in at $751 million, up 35% year-over-year, representing an adjusted EBITDA margin of 30%. These are decent numbers, but you have to really dive deep to understand the workings of this company.
Now, taking a look at the chart using the monthly time frame, we can see that the stock price has done nothing much except depreciate. This could stem from fundamental data or the public believes the stock is over priced. Formulating an opinion just on the stock chart is not a good decision, so take a look at current and historical numbers because there could be some information that is being missed. Despite the chart falling, it appears to be healthy and moving in a normal pattern.
Typically, a company's
financial statements are the reports that show the
financial position of the company. There are three main documents that fall into the category of financial statements. These documents include Twitter income statement, its balance sheet, and the statement of cash flows. Potential Twitter investors and stakeholders use financial statements to determine how well the company is positioned to perform in the future. Although Twitter investors may use each financial statement separately, they are all related. The changes in Twitter's assets and liabilities, for example, are also reflected in the revenues and expenses that we see on Twitter's income statement, which results in the company's gains or losses. Cash flows can provide more information regarding cash listed on a balance sheet, but not equivalent to net income shown on the income statement. Please read more on our
technical analysis and
fundamental analysis pages.
The goal of Twitter
fundamental analysis is to do accurate financial forecasts. There are several possible objectives to fundamental analysis, such as projecting of Twitter performance into the future periods or doing a reasonable stock valuation. The intrinsic value of Twitter shares is the value that is considered the true value of the share. If
the intrinsic value of Twitter is higher than its market price, buying is generally recommended. If it is equal to the market price, it is recommended to hold; and if it is less than the market price, then one should sell all shares Twitter. Please read more on our
fundamental analysis page.
How important is Twitter's Liquidity
Twitter
financial leverage refers to using borrowed capital as a funding source to finance Twitter ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Twitter financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Twitter's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Twitter's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the
breakdown between Twitter's total debt and its cash.
Detailed Perspective On Twitter
Risks
For a full list of risks, be sure to take a look at the 10-K report as that will give you a list with details the company finds. For now, here are a couple risks to keep in mind while completing your research. First, the intense competition this space faces is something to really consider. With Snapchat and Facebook, there will always be companies trying to be the next big hit. Secondly, you have to look at the sustainability of the company in the long term. An example would be Myspace and how that came and went, which could certainly happen to a company like Twitter. Again, just be cause a company goes public with a product millions use, this does not automatically make it a sustainable business.
Conclusion
This space is difficult to fully understand because it is always shifting and evolving, which means you have to complete your own research and do it carefully. Use your technical and fundamental data to ensure your portfolio can take this kind of risk. If at the end you still have questions, be sure to reach out to an investing professional as they can help point you in the right direction.
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Nathan Young is a Senior Member of Macroaxis Editorial Board - US Equity Analysis. With years of experience in the financial sector, Nathan brings a diverse base of knowledge. Specifically, he has in-depth understanding of application of technical and fundamental analysis across different equity instruments. Utilizing SEC filings and technical indicators, Nathan provides a reputable analysis of companies trading in the United States.
View Profile This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Nathan Young do not own shares of Twitter. Please refer to our
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