The kind of market we are in right now is ridiculous, and nowhere was that more apparent than the way the financial media fawned over the recent earnings report from Twitter, Inc. (NASDAQ:TWTR).

“Twitter Makes a Profit” is what most headlines said, in some form or another.

However, when investors dig into the actual results, although TWTR stock technically did make a quarterly profit, how it got there is the real story. These headlines are noise and most investors get duped by them instead of drilling down into the real story, which is what my stock advisory newsletter, The Liberty Portfolio, does.

TWTR Stock by the Numbers

So, as we dive into these numbers, remember that every TWTR stock bull thinks this is a fast-growing company deserving of a ridiculous price-earnings ratio and valuation.

Revenue grew 2% year over year to $732 million. That’s right, two percent. So much for “fast-growing”. Yet, somehow, TWTR stock investors are supposed to cheer the fact that it was the first increase all year long after three quarters of declining revenue?

Indeed, for the year, revenue was down 3% to $2.4 billion. That’s right, down.

If you haven’t already guessed that user growth is, well, non-existent, then you haven’t been paying attention. Stop tweeting and keep reading.

Twitter Users Down

Monthly active users were flat from the previous quarter. They increased by only 12 million YOY, or about 4%. One look at the chart of subscribers shows that they are clearly leveling out — and have been for some time. If you want to see how TWTR stock management wants to bury this information, there is no mention of how many people were added in its slide presentation — just the fact that Twitter stock is allegedly now driven by 330 million subscribers.

By the way, US revenue fell 8% YOY. The growth is now coming entirely from international increases. This tells us that pretty much any American who wants to use Twitter is using it. Done. Given that Twitter was busted in a recent exposé about censoring political posts and individuals it doesn’t like, that will only lead to less usage.

Ad Revenue Is Drying Up

So now we get into the meat of the TWTR stock story. If Twitter fails to grow its audiences, advertising revenues will continue to flatten or decline, which means, somehow, TWTR has to raise rates to squeeze more margin and growth from the existing subscriber base.

I don’t see how the company does this.

But as for this wonderful profit that Twitter stock generated, ask yourself how that can happen on flat user growth and a tiny revenue increase.

Cutting expenses, of course.

TWTR stock cut $68 million from its R&D and another $71 million from sales and marketing. And if I stop going out to dinner and make food at home, and stop paying my gardener and stop purchasing alcohol, I can cut my household budget to profit, also.

Twitter lost $457 million this year, and if the only way to generate a profit is to cut yourself to death, then what’s the point? Twitter stock soared on this news and now has come down a bit. Still, it’s trading at $33.30, up 7.59%, as I write this — far above where it traded during last year’s failed buyout talks.

If it wasn’t bought out for a perceived premium of $23 or so then, how could it be worth $33 now? A $23 billion valuation for a company that can’t even turn a profit with President Trump’s tweeting barrage is doing something wrong.

Lawrence Meyers is the CEO of PDL Capital, a specialty lender focusing on consumer finance and is the Manager of The Liberty Portfolio at www.thelibertyportfolio.com. He does not own any stock mentioned. He has 23 years’ experience in the stock market, and has written more than 2,000 articles on investing. Lawrence Meyers can be reached at TheLibertyPortfolio@gmail.com.