Beaking bad
Twitter shares plummet 21% in one minute after poor earnings data leaked.
Twitter Inc. posted first-quarter revenue that fell short of estimates and cut its sales forecast, signaling a struggle to attract more users and advertisers.
Selerity Inc., a New York-based provider of financial news and information, disclosed the earnings numbers less than hour before the end of Tuesday’s trading — on Twitter. Twitter fell 5.8 per cent to US$48.67 before the shares were halted, pending the company’s formal earnings release.
According to Forbes, “At the bell, shares were down 18.2 per cent at US$42.27, before recouping some of their slide in after-hours trading. By day’s end, 71.4 million shares changed hands, compared with an average of 17.8 million.”
Revenue will be US$470 million to US$485 million in the second quarter, Twitter said in a statement Tuesday. That missed analysts’ average projection for US$538.1 million, according to estimates compiled by Bloomberg. Full-year guidance was cut to between US$2.17 billion and US$2.27 billion, from the previous range of US$2.3 billion to US$2.35 billion. “It calls into question why they didn’t see this coming,” said Victor Anthony, an analyst at Axiom Capital Management. “I don’t think anyone ever questioned their ability to generate revenues.”
The number of monthly active members climbed 18 per cent to 302 million, compared with 20 per cent in the prior quarter, Twitter said in a statement Tuesday. Revenue rose 74 per cent to US$436 million, missing analysts’ average projection for US$456.2 million, according to estimates compiled by Bloomberg.
Chief executive officer Dick Costolo has been pushing product and engineering teams, which are being led by new managers, to step up the pace of innovation and dispel any doubts about Twitter’s potential as an advertising and social-media destination. The San Francisco-based company is facing greater pressure to show that such initiatives are delivering more users and revenue, according to Brian Wieser, an analyst at Pivotal Research Group.
“When you’re communicating with investors, there’s some expectation that you’ll actually deliver on what you’re aspiring towards,” said Wieser, who has a hold rating on Twitter’s stock. “The message needs to be matched by numbers, or Twitter’s credibility starts to become an issue.”
Earnings excluding some items were US7 cents a share, compared with analysts’ average estimate for US4 cents. Twitter’s first-quarter net loss widened to US$162 million from a loss of US$132.4 million a year earlier.
Twitter forecast revenue of US$470 million to US$485 mil- lion for the second quarter, compared with the average estimate of US$538.1 million.
Meanwhile, it was also announced Tuesday, that Google Inc. is teaming up with Twitter to help the social-media company sell more ads. Under the agreement, marketers using Google’s DoubleClick advertising service can buy Twitter’s Promoted Tweets, the search giant said in a blog entry. Twitter charges clients to highlight such postings into users’ feeds across the service. The deal helps DoubleClick clients to more easily measure the effectiveness of their Twitter campaigns, Google said.
Twitter’s Costolo, facing criticism last year because of slowing user growth, promised investors in November that the company would start revamping its products and services to make them easier to use. That has resulted in new features such as “While You Were Away,” which delivers the most popular tweets that occurred during a person’s absence, and Highlights, an Android feature that pushes a twice-daily digest of tweets direct to a person’s phone notifications.
The tweaks, which are helping to minimize the flood of information, are also helping to attract new users. Twitter’s home page, which used to just have an option to log in, now has categories, such as Nascar and cute animals, for people to explore even when they aren’t logged in to an account.
Those who do choose to sign up for the first time get an instant timeline based on their phone contacts and interests, making it easier to get started on the product.