Why Twitter Stock Tanked despite Topping 2Q17 Estimates
Twitter beats earnings and revenue estimates
Twitter (TWTR) reported its fiscal 2Q17 results on Thursday, July 27. The company’s revenues came in 5% lower than the corresponding quarter last year. Revenues came in at $574 million, beating analyst expectations of $537 million. The company’s total ad revenue, which accounts for close to 85% of Twitter’s total revenue, fell 8% YoY.
It also beat earnings expectations. Twitter posted EPS of $0.12 per share compared to analyst estimates of $0.05 per share, which excludes one-time items. Including the one-time factors, the social media giant posted a loss of $116 million in 2Q17 compared to a loss of $107 million in 2Q16. Twitter has now posted net losses every quarter since its debut in November 2013.
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Twitter’s monthly active user growth was flat in 2Q17
The number of people using Twitter on a monthly basis was 328 million in 2Q17, which was flat from 1Q17 and was up only 5% from 2Q16. Fiscal 1Q17 saw an addition of 9 million monthly users as there was a rise in activity after President Trump’s election. Meanwhile, as we saw in an earlier part, Facebook (FB) continues to see monthly active user growth and now has 2 billion of them.
Twitter stock plunged 14.1% on Thursday as investors reacted to the flat user data. Wall Street had estimated 332.5 million average monthly active users. Monthly users in the US fell by 2 million during 2Q17 to 68 million. Meanwhile, Twitter’s daily active users rose 12% YoY in 2Q17.