Twitter Shares Plummet After It Reports No Usage Growth In Q2

Twitter shares drop 9 percent as it fails to deliver user growth
Twitter beats Wall Street expectations, but user growth has totally stagnated
Author

28 July, 2017

The social media platform's earnings report this week showed a total number of 328 million global users, the same number of users listed in the company's first quarter earnings report.

Bloomberg reported that shares in the USA firm declined more than 9% in early trading, despite its quarterly revenue topping analysts' projections.

Twitter did however beat revenue expectations, bringing in revenue of $574 million. Average daily active users (DAUs) grew 12% year-over-year. The company reported an operating loss of $38.4 million, which compared favorably with a loss of $86.4 million reported in the year-ago quarter. Analysts expected Twitter to see a slight increase of MAUs to 328.8 million. Additionally, it reported 12% year-over-year growth in daily active users, which is less than the 14% increase it reported in the prior quarter.

The social media giant posted earnings per share of 8 cents, compared with a Wall Street consensus estimate of 5 cents, which excludes stock based compensation and other one-time items.

But Twitter also said that it doesn't expect its overall sales growth to improve in the second half, citing "headwinds" related to products it's de-emphasizing.

That's the best way to describe Twitter's current status when it comes to adding new users.

Looking ahead, Twitter forecast Q3 adjusted EBITDA of $130 million to $150 million, and adjusted EBITDA margins between 25% and 26%.

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Using the new method, revenues, at $574 million, fell 5% vs the period previous year - but compared to expectations for $536.7 million.

In a statement, both CEO Jack Dorsey and COO Anthony Noto claim that the increased user growth is a sign of Twitter's strength.

Despite its appeal among celebrities and public figures, Twitter has struggled to sustain its closely watched user growth even as it invests in features and live content to help draw viewers and boost user engagement.

The company's net loss widened to $116.5 million, or 16 cents per share, in the second quarter ended June 30, from $107.2 million, or 15 cents per share, a year earlier.

One of Twitter's biggest gambles to spur higher user engagement has been its increased investments in live and streaming video content.

Yes, TWTR is now trading down more than $2 per share, which is a drop larger than 11 percent for the modestly priced stock.


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