Twitter Slumped after Earnings Report Disappointment

Shares of Twitter Inc. (NYSE: TWTR) slumped 12.36% to $16.16 on Wednesday morning after the company reported Tuesday its slowest revenue growth since going public in 2013 and set a disappointing next quarter outlook.

Twitter announced the second quarter revenue increased 20% to $602 million compared with the same quarter last year. Net loss was $107 million, or negative $0.15 per diluted share. Average monthly active users increased 3% to 313 million for the second quarter compared with 310 million in the previous quarter. For the next quarter guidance, Twitter estimated revenue between $590 and $610M which much below the consensus expectation of $678M.

“We’ve made a lot of progress on our priorities this quarter,” said Jack Dorsey, Twitter’s CEO. “We are confident in our product roadmap, and we are seeing the direct benefit of our recent product changes in increased engagement and usage. We remain focused on improving our service to make it fast, simple and easy to use, like the ability to watch live-streaming video events unfold and the commentary around them.”

“This quarter we saw year-over-year and sequential growth in both monthly active and daily active usage,” said Anthony Noto, Twitter’s CFO. “We continue to believe that, with disciplined execution against our priorities, we can drive sustained engagement and audience growth over time. We also have exciting momentum with live-streaming video initiatives underway. We’re partnering with the providers of the world’s most popular live content to bring more and more of those events onto Twitter to provide a unique and compelling consumer experience.”

Tuesday’s stinging report coupled with a deal-friendly climate in Silicon Valley these days could reignite questions around Twitter’s fate as an independent public company. Microsoft Corporation (NASDAQ: MSFT)’s $26 billion acquisition of LinkedIn Corp (NYSE: LNKD) in mid-June helped fuel that speculation, and pushed Twitter’s stock up more than 30% before Tuesday.

Asked by an analyst why it makes sense for Twitter to remain independent, Jack Dorsey said Tuesday, “I think there is just so much farther to go in terms of our strength as not only a service of importance, but also a company in a business of importance.”

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