Why Twitter Stock Plunged Today | The Motley Fool

What happened

Shares of Twitter (NYSE:TWTR) fell 15% on Friday, following the release of the social media network’s first-quarter results. 

So what

Twitter’s number of monetizable daily active users jumped 20% year over year to 199 million. Its revenue, in turn, rose 28% to $1.04 billion, fueled by a 32% increase in ad sales to $899 million. Growth was particularly strong in international markets, where Twitter’s revenue surged 41%, to $480 million.

“Advertisers continue to benefit from updated ad formats, improved measurement, and new brand safety controls,” Chief Financial Officer Ned Segal said in a press release.

Twitter’s stock price pulled back on Friday, despite posting solid growth metrics. Image source: Getty Images.

Twitter’s profitability also improved during the quarter. It generated an operating profit of $52 million, compared with a loss of $7 million in the year-ago period.

Now what 

Investors, however, appeared to focus more on Twitter’s guidance. Management forecast second-quarter revenue of $980 million to $1.08 billion. The midpoint of that range was slightly below Wall Street’s expectations of $1.06 billion. 

Twitter’s shortfall comes after fellow social media giant Facebook delivered blockbuster first-quarter results. That made for difficult comparisons, and investors’ expectations for Twitter may have simply been too high.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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