What the Headlines about Tesla, Snap, and Twitter “Earnings” Should Have Said, by Wolf Richter

Truth is the first casualty of war and earnings reports. From Wolf Richter at wolfstreet.com:

How can the media be so gullible – and pliable? I don’t know either.

When Snap reported “earnings” this week – in quotes because it was its biggest loss ever – media headlines were euphoric, from TechCrunch(“Snap shares skyrocket on first earnings beat with revived user growth”) to The Wall Street Journal (“Snap Climbs Back Above IPO Price After ‘Shocker’ Earnings”).

The theory was that Snap had reported “better-than-expected earnings.” Thanks to these headlines, over February 7 and 8, Snap shares skyrocketed 48% to $20.75, though they have fallen off somewhat since then.

So here are some modest suggestions as to what the headlines should have been, based on Snap’s “earnings” report:

Snap losses surge 106% to $350 million in Q4, and 570% to $3.4 billion for the year, the most ever.

Snap lost more money than it generates in revenues; what is it doing with all this money?

Snap burned $820 million in cash in 2017, but still sits on $2 billion from investors and can keep going at this cash-burn rate through 2019, so no problem.

Snap Q4 loss soars to $350 million, on $286 million in revenues. Stop and think about that for a moment.

Losses are ballooning faster than revenues, and from a larger base, which is the road to financial perdition, but no problem for analysts.

Twitter also reported earnings this week, and the media headlines showered it with love, from The New York Times (“Twitter Has Good News for Once: Its First Quarterly Profit”) to CNBC (“Twitter rockets more than 20 percent after the company reports first-ever net profit”).

Twitter’s shares jumped 27% on the announcement, after they’d already soared 60% over the past year on takeover hype that never materializes but keeps getting trotted out time and again to pump up shares. Since the spike following the earnings announcement, shares have declined 10%.

So here are some suggestions for headlines to describe Twitter’s situation:

Twitter 2017 revenues shrink 3.4%, Q4 revenues inch up 2%, as company embarks on Cost-Cutting as strategy

Twitter makes $91 million in Q4 profit after gutting R&D and sales and marketing expenses, which might explain revenue stagnation. But still loses $457 million for the year.

Twitter cuts $68 million from R&D and $71 million from sales and marketing expenses in Q4, trying to shrink itself to growth. Good luck.

Even the ceaseless promos from President Trump and the media circus around his Twitter actions fail to boost Twitter’s revenues.

No other company has ever gotten this much constant and free promo from any White House, but Twitter still can’t make it work.

To continue reading: What the Headlines about Tesla, Snap, and Twitter “Earnings” Should Have Said

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