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Twitter Revenue Beats Estimates Amid Increase in Monthly Users

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  • Twitter Revenue Beats Estimates Amid Increase in Monthly Users

Twitter Inc.’s road to a turnaround looks like it isn’t quite as rough as expected.

The company reported a decline in quarterly revenue for the first time since it went public in 2013, but sales, at $548 million, were higher than the $509 million analysts predicted. The shares surged as much as 13 percent in early trading. Before Wednesday, the stock had fallen 10 percent this year.

Another bright spot: user growth. Twitter has been trying to reverse a slowdown in the growth of its audience for its site, where people put up short posts about what’s happening. Average monthly active users reached 328 million in the first quarter, up 6 percent from the same period last year. The number of daily users has been increasing at a faster pace each quarter for the past year, Twitter reported.

The company said it plans to use that momentum, combined with better ad pricing and improved returns on investment, to convince marketers to spend more. Still, it expects revenue growth to “meaningfully lag” audience growth for the rest of the year. As Twitter struggles to define its future, it faces competitors with larger and faster-growing user bases, like Facebook Inc., Instagram and Snap Inc., which went public in the first quarter.

User growth “could be your first indicator that revenue could recover some day,” said Mark Mahaney, an analyst at RBC Capital Markets. Still, it’ll be tough, given the competition. “The investor issue is — when do things get less worse?”

After a failed process to sell itself in 2016, Twitter wants to prove it can go it alone and reach profitability by the end of this year. It has wielded the ax in pursuit of that goal. The company sold its Fabric developer services business to Google, shut down its Tellapart ad tech offering, and cut some planned ad products. First-quarter earnings, excluding some items, came in at 11 cents a share, well ahead of the 1 cent analysts estimated.

Twitter said that some of its work to improve its product, such as showing people more relevant tweets at the top of their timelines, has attracted more visitors to the service. Efforts to curb abuse and harassment have led to a decrease in reports and blocking from users, which the company described as “meaningful progress.”

Last year, Twitter embarked on a strategy to appeal to broader audiences by streaming live video on its site from sports, entertainment and news partners, including Bloomberg. The plan is working, as video ads were the fastest-growing ad unit, generating the most revenue, the company said. Still, it hasn’t been enough to accelerate overall sales.

“It’s more like the New York Times than it’s like a tech company,” said James Cakmak, an analyst at Monness Crespi Hardt & Co. Twitter competes with many other companies that want premium video content, he said. For example, Twitter was outbid by Amazon.com Inc. earlier this year for rights to Thursday night NFL games. “They can’t afford to keep up with the deep pockets that are willing to pay for that content.”

The company’s ad revenue is declining even as the overall market for digital advertising increases, and even as the site is constantly in the news because of prolific use by U.S. President Donald Trump. Trump’s tweets haven’t helped the company, Twitter has said.

“Revenue down isn’t good,” said Michael Pachter, an analyst at Wedbush Securities. “When Facebook grows by four Twitters a year, that tells you that there’s something really wrong.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Crude Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

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Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

Oil retreated from an earlier rally with investment banks and traders predicting the market can go significantly higher in the months to come.

Futures in New York pared much of an earlier increase to $63 a barrel as the dollar climbed and equities slipped. Bank of America said prices could reach $70 at some point this year, while Socar Trading SA sees global benchmark Brent hitting $80 a barrel before the end of the year as the glut of inventories built up during the Covid-19 pandemic is drained by the summer.

The loss of oil output after the big freeze in the U.S. should help the market firm as much of the world emerges from lockdowns, according to Trafigura Group. Inventory data due later Tuesday from the American Petroleum Institute and more from the Energy Department on Wednesday will shed more light on how the Texas freeze disrupted U.S. oil supply last week.

Oil has surged this year after Saudi Arabia pledged to unilaterally cut 1 million barrels a day in February and March, with Goldman Sachs Group Inc. predicting the rally will accelerate as demand outpaces global supply. Russia and Riyadh, however, will next week once again head into an OPEC+ meeting with differing opinions about adding more crude to the market.

“The freeze in the U.S. has proved supportive as production was cut,” said Hans van Cleef, senior energy economist at ABN Amro. “We still expect that Russia will push for a significant rise in production,” which could soon weigh on prices, he said.

PRICES

  • West Texas Intermediate for April fell 27 cents to $61.43 a barrel at 9:20 a.m. New York time
  • Brent for April settlement fell 8 cents to $65.16

Brent’s prompt timespread firmed in a bullish backwardation structure to the widest in more than a year. The gap rose above $1 a barrel on Tuesday before easing to 87 cents. That compares with 25 cents at the start of the month.

JPMorgan Chase & Co. and oil trader Vitol Group shot down talk of a new oil supercycle, though they said a lack of supply response will keep prices for crude prices firm in the short term.

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Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

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Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

Oil prices rose on Monday as the slow return of U.S. crude output cut by frigid conditions served as a reminder of the tight supply situation, just as demand recovers from the depths of the COVID-19 pandemic.

Brent crude was up $1.38, or 2.2%, at $64.29 per barrel. West Texas Intermediate gained $1.38, or 2.33%, to trade at $60.62 per barrel.

Abnormally cold weather in Texas and the Plains states forced the shutdown of up to 4 million barrels per day (bpd) of crude production along with 21 billion cubic feet of natural gas output, analysts estimated.

Shale oil producers in the region could take at least two weeks to restart the more than 2 million barrels per day (bpd) of crude output affected, sources said, as frozen pipes and power supply interruptions slow their recovery.

“With three-quarters of fracking crews standing down, the likelihood of a fast resumption is low,” ANZ Research said in a note.

For the first time since November, U.S. drilling companies cut the number of oil rigs operating due to the cold and snow enveloping Texas, New Mexico and other energy-producing centres.

OPEC+ oil producers are set to meet on March 4, with sources saying the group is likely to ease curbs on supply after April given a recovery in prices, although any increase in output will likely be modest given lingering uncertainty over the pandemic.

“Saudi Arabia is eager to pursue yet higher prices in order to cover its social break-even expenses at around $80 a barrel while Russia is strongly focused on unwinding current cuts and getting back to normal production,” said SEB chief commodity analyst Bjarne Schieldrop.

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Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

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Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

Oil prices rose to $65.47 per barrel on Thursday as crude oil production dropped in the US due to frigid Texas weather.

The unusual weather has left millions in the dark and forced oil producers to shut down production. According to reports, at least the winter blast has claimed 24 lives.

Brent crude oil gained $2 to $65.47 on Thursday morning before pulling back to $64.62 per barrel around 11:00 am Nigerian time.

U.S. West Texas Intermediate (WTI) crude rose 2.3 percent to settle at $61.74 per barrel.

“This has just sent us to the next level,” said Bob Yawger, director of energy futures at Mizuho in New York. “Crude oil WTI will probably max out somewhere pretty close to $65.65, refinery utilization rate will probably slide to somewhere around 76%,” Yawger said.

However, the report that Saudi Arabia plans to increase production in the coming months weighed on crude oil as it can be seen in the chart below.

Prince Abdulaziz bin Salman, Saudi Arabian Energy Minister, warned that it was too early to declare victory against the COVID-19 virus and that oil producers must remain “extremely cautious”.

“We are in a much better place than we were a year ago, but I must warn, once again, against complacency. The uncertainty is very high, and we have to be extremely cautious,” he told an energy industry event.

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