SAN FRANCISCO – For Twitter, it was a double whammy.
Shares of the social media company plunged after it reported first-quarter revenue far below Wall Street estimates and issued a disappointing outlook for the current quarter and for the year.
Shares of Twitter TWTR fell as much as 20% and closed down 18% to $ 42.27.
“Revenue growth fell slightly short of our expectations due to lower-than-expected contribution from some of our newer direct response products,” Chief Executive Dick Costolo said in a written statement.
The news hit Twitter like a ton of bricks. While the slowdown in user growth has dogged Twitter as a publicly traded company, “revenue has been a bright spot,” said Wedbush Securities analyst Shyam Patil.
“When people talk about a positive thesis for the stock, they talk about the strong revenue results it has shown since it went public. Before you had strong monetization and weak users. Now potentially you have weak revenue and weak users,” Patil said. “It’s going to be hard to find a bright spot now.”
TRADING HALTED AFTER EARLY RELEASE
Compounding problems for Twitter on Tuesday, trading in its shares was halted after quarterly results leaked before the market closed. New Jersey research firm Selerity reported the company’s results in a series of tweets.
Twitter said it was investigating the source of the leak and released its earnings early.
“We asked @nyse to halt trading once we discovered our Q1 earnings numbers had leaked, and published our results as soon as possible,” the San Francisco social media company said in a tweet.
Selerity said it got the results from Twitter’s investor relations website and then used Twitter’s own service to broadcast them.
“No leak. No hack,” the research firm which crawls the Web for financial data said.
Twitter revenue was $ 436 million in the first quarter, below estimates of $ 456 million.
Twitter reported a loss of $ 162 million, or 25 cents a share, compared with a loss of $ 132 million, or 23 cents a share a year ago.
Excluding certain costs and other items, the company’s earnings rose to seven cents a share from zero cents a share a year ago. That was better than the 4 cents analysts polled by FactSet had expected on average.
For the second quarter, the company said it expects revenue between $ 470 million and $ 485 million, below analyst estimates of $ 538 million.
For the full year, the company expects sales of $ 2.17 billion to $ 2.27 billion, also below estimates of $ 2.37 billion.
Average monthly active users were in line with expectations at 302 million, up 18% from a year ago. But monthly active users on mobile came in at 241.6 million, below expectations of 243 million.
Financial firm Selerity tweeted Twitter’s financial results before Twitter’s scheduled, post-market release on Tuesday. (Photo: Twitter)
The inadvertent earnings release created chaos in what is normally an orderly release of information. Twitter is already under intense scrutiny as Costolo attempts to reinvigorate user growth and generate more revenue. A Twitter spokesman could not be immediately reached for comment.
“This happens every once in a while. It’s unfortunate but Twitter responded and released results as soon as they were aware,” Patil said.
But the surprise earnings release “probably didn’t help” Twitter, he said.
“It probably led to a more exaggerated move,” Patil said. “From a positive standpoint, theoretically the bad news from the results should already be in so if they are able to give anything incrementally positive on the earnings call, it could end up helping them.”
In its earnings release, Twitter said it would buy TellApart Inc., a marketing technology company for retailers and e-commerce advertisers, to “significantly expand Twitter’s direct response capabilities for marketers.” Twitter did not release financial terms of the deal. It’s expected to close around June 1.
Twitter also announced a partnership with Google’s DoubleClick platform to improve advertising performance measurement for Twitter direct response marketers. As part of the partnership, Twitter will also make its advertising inventory available through the DoubleClick Bid Manager.
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