Twitter Inc (TWTR) came into Tuesday’s earnings report in dire need of some good news. And traders were optimistic leading up to the first-quarter earnings release: TWTR stock rallied 3.9% higher today in anticipation of the news.
It seems the rally will be rather short-lived. Twitter’s first-quarter earnings were deeply disappointing, as the social media darling whiffed on revenue and Q2 guidance, although it managed to beat on earnings. This was an objectively awful report for shareholders.
TWTR stock immediately fell as much as 11% in after-hours trading, with shares trading below the $16 level just after 4:30 p.m. EST.
No End in Sight for TWTR Stock
Analysts expected Twitter to post non-GAAP earnings per share of 10 cents, up 43% from the same period a year ago. This would be the only major area that TWTR didn’t disappoint, as adjusted EPS came in at 15 cents, more than double the 7 cents per share it earned a year ago. On an unadjusted basis, Twitter lost 12 cents per share.
The consensus Q1 revenue forecast called for $607.84 million, up 39.4% year-over-year; instead, TWTR revenue came in at just $595 million in Q1, up 36% year-over-year. Twitter blamed the shortfall on “slower than expected growth in brand advertising spend.”
Of course, TWTR stock owners are interested in more than just boring, old-fashioned metrics like sales and profits. They want to see the number of monthly active users (MAUs).
Well, you asked for it: MAUs were 310 million in the first quarter, up a pitiful 3% year-over-year, and barely above the 305 million it reported last quarter — which was a decline from 307 million previously.
Unfortunately, TWTR stock is poised to be a disappointment not just for Q1, but for Q2 as well. Guidance for revenue between $590 million and $610 million was nowhere near the $677.57 million Wall Street had been expecting.
Twitter’s report follows a string of bad earnings from tech heavyweights; shares of Alphabet Inc (GOOG, GOOGL), Microsoft Corporation (MSFT), and International Business Machines Corp. (IBM) all plunged in the past week after disappointing starts to the new year.
At the close of trading on Tuesday, TWTR stock was down 23% year-to-date, and a whopping 65% in the last year.
It looks like the nightmare will only continue for the near future, as fresh-faced CEO Jack Dorsey struggles to helm two publicly traded companies: Twitter and Square Inc (SQ). I wouldn’t be surprised if we start seeing some investors increasingly call for him to choose one company or the other. His full attention is certainly demanded at Twitter.
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As of this writing, John Divine did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.
