Citigroup Sees Twitter's Recent Rally Ending; Declining MAUs And Weak Guidance Spook Investors

Citi's Take

Citigroup's Mark May argued Twitter's recent rally was ending, however, as MAUs and weak guidance begin to increasingly spook investors.

Although Twitter's international MAUs reported ahead of expectations, Twitter's total and U.S. MAUs came in line with expectations for Q1.

In order to asses whether Twitter's MAU growth is likely to surprise 2Q16 estimates, May looked to traffic and app download data through the end of June.

Declining App Rankings

Although 2Q's crowded event schedule including the NBA Finals, Euro Cup, Copa America, Brexit and the election "would seem to encourage Twitter usage and app download," data from App Annie showed otherwise.

Related Link: BTIG Says Twitter Is Betting The Farm On Live Sports, Video To Court Media Giants' Interest

App Annie, a business intelligence company, showed Twitter's ranking on the iOS app store improved only marginally this quarter, while its Android ranking worsened. This pushed "the average ranking slightly more negative in 2Q16," stated the Citi analyst. Additionally, "comScore's cross-screen traffic data showed that US visitors declined ~2 percent, sequentially in 2Q," stated May.

The rating decline "highlights Twitter's inability in the quarter to capitalize on high-profile live events for which mgmt believes the service is tailor-made," said May. The analyst has a Neutral rating on Twitter.

According to TipRanks, Mark May is one of the better analysts covering Twitter with a 64 percent success rate and a +10.7 percent average return per recommendation. The analyst is ranked 190 out of 4079 analysts.

At the time of writing, Twitter traded at $18.58, down 1.50 percent Tuesday.

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