Inside Twitter’s July Stock Decline
TWTR shares fell 10% in July 2017
Shares of social networking firm Twitter (TWTR) fell 10% in July 2017 to close the month at $16.09. Twitter announced its 2Q17 results on July 27, 2017, and shares fell 14.1% that same day.
Twitter reported revenues of $574 million for 2Q17, with non-GAAP (generally accepted accounting principles) EPS (earnings per share) of $0.12. Analysts expected Twitter to post revenue of $537 million, with EPS of $0.05 for 2Q17.
So why did Twitter stock fall, even though it beat the revenue estimate by 7% and the EPS estimate by 140%?
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Revenue and user metrics
Twitter’s revenue in 2Q17 fell 5% YoY (year-over-year), while its GAAP net loss rose 9% YoY to $115 million. Its non-GAAP EPS also fell 20% YoY in 2Q17.
Twitter has reported a GAAP net loss in every quarter since its IPO (initial public offering) in 2013. Analysts expect Twitter’s revenue to fall 6% YoY in 3Q17 to $579.22 million and 3.7% YoY to $690.68 million in 4Q17.
It appears that Twitter’s user growth reached a roadblock in 2Q17. Its MAU (monthly active users) rose 5% YoY to 328 million in 2Q17, while its user growth was flat sequentially. Its monthly active users in the United States (SPY) fell by two million QoQ (quarter-over-quarter) to 68 million in 2Q17, down from 70 million in 1Q17. Notably, Twitter’s MAU rose by nine million in 1Q17 after the 2016 election.
By comparison, Facebook’s (FB) MAU continued to rise in 2Q17 and recently touched the two-billion mark.
In the next part, we’ll look at Netflix.