Twitter Stock Plunges Up To 20% After Missing On Earnings

Topline: Although the company continued to grow its monetizable user base, Twitter shares fell sharply on Thursday after missing earnings thanks to weaker revenue and advertising volumes than expected.

  • Following its disappointing third-quarter earnings report, Twitter stock fell as much as 20% in early trading and is now sitting at just above $31 per share.
  • Twitter said it faced “a number of headwinds” with its revenue for the rest of the year, including product issues and weaker-than-expected advertising business.
  • The social networking site missed top- and bottom-line estimates, reporting profit of just 17 cents per share, compared with the 20 cents expected.
  • For the first time since late 2016, Twitter’s revenue didn’t surpass guidance expectations: Although it grew 9% year-over-year, revenue was reported at just over $823 million—a steep miss from the $874 million expected by Wall Street.
  • Quarterly advertising revenues took a hit from weak volumes in July and August, coming in at $702 million—significantly lower than the $756 million in ad revenue analysts were expecting.
  • Despite missing out elsewhere, Twitter did continue to steadily grow in a key metric—its monetizable daily user base, which rose to 145 million from 139 million last quarter.

Crucial quote: “Despite its challenges, this quarter validates our strategy of investing to drive long-term growth,” Twitter CFO Ned Segal said in a statement. “More work remains to deliver improved revenue products.”

Surprising fact: Twitter shares were up 35% for the year before the company missed earnings expectations. If the early stock losses on Thursday hold, Twitter will have lost around $6 billion of its $30 billion in market value.