wnol.info August 23 2017

Twitter shares dive after exodus of American users

August 23 2017, 11:11 | Alonzo Simpson

Twitter beats Wall Street expectations, but user growth has totally stagnated

Jack Dorsey

Twitter shares plunged as much as 10.5 percent, to $17.58, in pre-market trading Thursday, after the company reported its second-quarter results, and nearly all of Wall Street's attention was focused on the company's number of monthly users.

On the earnings call, Anthony Noto, Twitter's chief financial officer and chief operating officer, said that the company has shifted its focus more to daily user growth, rather than monthly active growth.

Twitter Inc. says its platform is new and improved, but its improvements did not bring in any new monthly active users this quarter. Average daily active users (DAUs) grew 12% year-over-year. Including those factors, Twitter posted a loss for the quarter of $116 million, compared to a loss of $107 million a year ago. They want to see more people using Twitter.

Revenue: $574 million vs. $536.7 million expected, according to Thomson Reuters.

Twitter's latest round of financials isn't looking all that hot.

One of the core reasons Twitter's stock price had jumped by around 40 percent since April was its user growth, and this was a key metric for Wall Street leading up to today's earnings announcement.

"We're proud that the product improvements we're making continue to increase their overall contribution to Twitter's growth". Mistreatment on the platform has scared off both advertisers and potential buyers, as Salesforce ruled out a bid for Twitter in part from concerns the social platform could not handle online abuse and trolls.

In fact, in the U.S., Twitter's monthly user base decreased by 2 million in the quarter, declining to an average of 68 million for Q2.

The company's stock fell as much as 14 percent to $16.85 after it released its earnings report that showed a net loss and decline in revenue. We believe that Twitter's user base is strong and "in love with the brand" which is great as this should translate to higher engagement over time.

Chief Financial Officer Anthony Noto said Twitter doesn't know why US monthly active users slipped. This quarter, the very Twitter move of its users not growing and its advertising business stalling happened once again and shed more doubt on the company's future.

The shares fell 9.6% to $17.73 in early trading. For the third quarter, it projects adjusted EBITDA of $130 million to $150 million with a margin of 25% to 26%.

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