Twitter (TWTR) Stock Down Sharply on Third Quarter Earnings
Shares of Twitter Inc. (TWTR) were trading down -6.66 or -13.71 percent to $41.90 per share in Tuesday's premarket after the company announced third quarter earnings after the close yesterday. While the company met or beat analyst expectations for earnings, user growth expectations fell slightly below analyst forecasts. Twitter stock closed at $48.56, off -1.39 or -2.78 percent in Monday's regular trading session.
Twitter reported a profit of +$0.01 per share versus a loss of -$0.13 in the same quarter one year ago, in line with analyst expectations. Revenue jumped to $361 million, more than double over last year's results which beat analyst expectations of $351 million. Mobile ads made up 85 percent of the total, while foreign market revenue increased +176 percent to $121 million.
Twitter reported monthly active users or MAU, which is an important metric in social media increased +23 percent to 284 million in the quarter following last quarter's +24 percent increase after the World Cup drove significant traffic to the social media site.
Nevertheless, timeline views per user - another important metric that measures engagement - declined 7 percent worldwide to 636, with views dropping 6 percent in the United States to 774. Total timeline views came to 181 billion, just below analyst expectations.
In a conference call after the earnings release, Chief Executive Dick Costolo said in response to a question that, "In terms of logged out users versus logged in, on a geographic basis we're not prepared to share any deltas of segmented information at this point in time beyond the overall user size and then obviously the user cases that we have today with them.
He continued saying, "As it relates to our outlook for monthly active users, I gave a couple of piece of information and specific intent around timeline use per MAU and revenue per timeline view and then of course overall revenue. The combination of those three inputs will give you a range of outcomes for our outlook for MAU growth in the fourth quarter and is the best indicator to how to think about it.
Fourth quarter guidance had the company project sales of $400 million to $450 million, which came up on the low side of analyst estimates of $449 million. Twitter stock is reacting more on the company's fourth quarter guidance miss and timeline view per user data than on the fact that the company reported a profit on twice the revenue over last year's third quarter.
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