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.

San Francisco, California based Twitter is a social media and microblogging service best known for allowing subscribers to "tweet , or transmit messages limited to 140 characters, but able to send digital files such as photographs and videos.
Twitter had half a billion subscribers in 2012 and is one of the top ten visited websites on the Internet. The company had its initial public offering on November 7th, going public at $26 per share. Twitter stock then went on to rally to a high of $74.73 per share in late December of 2013.

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.

Other News About Twitter
Queen Elizabeth Abused By Twitter Trolls After Sending Her First Tweet
Queen trolled by Twitter users after her first "tweet .
Twitter's app is no longer available for Google Glass
App can no longer be restored if erased from Google Glass.

Other Stocks in the News
Tesla falls after report raises questions on demand for cars
Stock falls almost 6 percent in trading yesterday.
Apple and Alibaba hint at partnership
Possible partnership could combine Apple Pay and Alipay.

Published on Oct 28, 2014
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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