Twitter share price falls on disappointing quarterly metrics

on Oct 28, 2014
Updated: Oct 21, 2019
Listen, Tuesday, October 28: Twitter Inc’s (NYSE:TWTR) shares plunged 11 percent in after-hours trading in New York yesterday after the group reported a slowdown in the growth of user numbers and indicated fourth-quarter sales may miss Wall Street’s targets.

In yesterday’s trading, Twitter’s share price closed 2.78 percent down at $48.56. The company’s stock has fallen 23.71 percent since the start of the year.
**Slowdown in user growth**  
US microblogging company Twitter yesterday reported a disappointing set of results with growth in active users flattening and indicators of user engagement falling.

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The company reported 284 million monthly active users (MAUs) on average over the last three months, which represents a 23 percent rise compared to the same period in 2013, but only a five per cent increase from the second quarter of 2014. Average mobile MAU’s accounted for about 80 percent of all MAU’s. Meanwhile, total timeline views were 181 billion, marking a 14 percent increase year-on-year, which was, however, below analysts’ expectations.

Reuters yesterday quoted analyst Arvind Bhatia at Sterne Agee as commenting: “For a stock like Twitter, which is up a bit since the last quarter, expectations were high. People expect more than just in line.”
**Q3 revenues**
Despite the disappointing results in user growth, the group revealed stronger than expected third-quarter revenues. The messaging service more than doubled its sales and exceeded analysts’ expectations.

The value of Twitter ads grew, with the company making $1.77 for every thousand views of its timeline, an 83 percent rise from a year earlier and a significant increase from last quarter’s $1.60.
Third quarter revenue was $361 million (£224 million), beating Wall Street estimates of $351 million.
Advertising revenue came in at $320 million with mobile advertising revenue accounting for 85 percent of that figure. Data licensing and other revenue totaled $41 million, which represented an increase of 171 percent from the previous year. International revenue rose 176 percent to $121 million.

Twitter reported a non-GAAP profit of a penny per share, versus a 13 cent loss a year earlier, in line with expectations, and a GAAP loss of 29 cents per share. Last year’s GAAP loss was 48 cents per share. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) amounted to $68 million compared to $9 million in the same period last year.
Commenting on the third-quarter results, Dick Costolo, chief executive at Twitter, said: “I’m confident in our ability to build the largest daily audience in the world, over time, by strengthening the core, reducing barriers to consumption and building new apps and services.”
**Fourth-quarter outlook**
The group forecast sales of $440 million to $450 million in the Christmas quarter, versus analysts’ expectations of around $448.8 million, and adjusted EBITDA of between $100 million and $105 million.
Twitter also revised its outlook for the full year, saying that it expected full year 2014 revenue to be between $1.365 billion and $1.375 billion, with adjusted EBITDA of between $260 million and $265 million.
**As of Monday’s US close buy Twitter shares at $48.56.**
**As of Monday’s US close sell Twitter shares at $48.56.**


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