Twitter shares tumble as it predicts hard road ahead
Twitter showed modest growth in the number of active users on the social network Tuesday, but a gloomy forecast and revenues that missed Wall Street expectations sent the shares tumbling in after-hours trading.
The growth in users, which reversed a decline in the previous quarter, was a faint sign of a turnaround at the ailing company. But less than stellar predictions for revenues over the coming months showed just how far Twitter has to go. The stock fell more than 10 percent when its earnings report came out, after rising nearly 4 percent in regular trading.
Twitter’s focus on the here and now made it the darling of news junkies, but the social network has struggled to grow its customer base — and thus its advertising revenue.
Concerns over whether growth had stalled at Twitter appeared to be confirmed when the company said its monthly active users had actually shrunk over the last three months of 2015. The monthly user figures reported Tuesday helped relieve those worries somewhat: The company reported 310 million monthly active users, up from 305 million the previous quarter.
Twitter predicted that it would have somewhere between $590 million and $610 million in revenues in the second quarter of this year, far short of the $677 million expected by the analysts polled by Bloomberg.
For the first three months of the year, the company reported $595 million in revenue, missing the $608 million Wall Street had expected.
Co-founder Jack Dorsey returned to take the reins as chief executive last year, first on an interim basis in July and then officially in October. Since his return, Dorsey has shaken up Twitter’s top ranks while trying to broaden the network’s appeal with new features, including Twitter’s Moments — which highlights tweets about daily top-trending topics — and also doubling down on the real-time nature of Twitter by betting on live video.
Earlier this month, Twitter reached an agreement with the NFL to stream 10 full Thursday night football games.
But Twitter’s user-generated live streaming product Periscope faces stiff competition from Facebook, which has recently launched its own service.