Heading into its first-quarter 2018 earnings report, Twitter Inc (NYSE:TWTR) found itself in a unique position. The company became a veritable Wall Street darling, rising from the doldrums last summer. Fortunately for speculators, TWTR stock never quit moving, eventually closing out 2017 up over 47%.

Impressively, the momentum carried over into this year. Against the session prior to the Twitter earnings release, TWTR stock was up over 26%. This signaled that investors, and long-embattled shareholders, finally believed in the Twitter recovery story. However, shares slipped 2.4% heading into the critical report.

On paper, covering analysts expected Twitter stock to produce solid results. Both earnings and revenue consensus expectations were elevated against the year-ago quarter’s actuals. Several experts even pegged their forecasts significantly higher than the consensus target.

As a result, InvestorPlace contributor Joseph Hargett noted that several days before Q1, speculative traders ramped up their bullishness. Hargett reported that “the weekly April 27 put/call open interest ratio comes in at 0.38, with calls nearly doubling puts among options most affected by Wednesday’s report.”

That said, CNBC reported that sentiment changed dramatically 24 hours before Twitter released its earnings report. The business media network warned viewers about significant volume in put options, or bearish bets against a company. Short traders anticipate that TWTR stock will fall below $27 by the end of this week. As of this writing, Twitter’s stock is down 7.2%. Ouch!

The company has found itself at a crossroads. While investors were confident in Twitter stock, the overall sentiment was that the low-hanging fruit was gone. TWTR was no longer the sexy, contrarian play. Now, the markets knew what to expect.

Nevertheless, I still believe the bulls have the upper hand.

Twitter Stock Hits on All Cylinders

If the immediate trading dynamic represents what lies ahead, the newly incoming bears are wishing they never made their move. Against a 12 cent earnings per share target, TWTR stock came in at 16 cents, producing a 33% earnings surprise. Estimates ranged from eight cents to 18 cents.

Wall Street had similar enthusiasm for the social media firm’s revenue haul. While the consensus target called for $608 million, TWTR generated $655 million, up nearly 8% against expectations. Against the year-ago quarter, top-line sales have increased nearly 20%.

The biggest takeaway is that Q1 is the second consecutive quarter where the company was profitable. Furthermore, management believes that they will be GAAP profitable for fiscal 2018.

This isn’t just based on executives pumping up their organization. According to CNBC:

Twitter beat monthly active user projections, hitting 336 million at a growth rate of 6 percent year over year. Specifically, it now has 69 million monthly active users in the U.S., slightly short of the estimated 70 million. It reaches 267 million monthly active users internationally, ahead of the 266 million projections. It also grew daily active users 10 percent year over year, but does not break out the specific number of users.

The increased MAUs provided better engagement opportunities and advertisers were willing to invest more money in the Twitter platform. Management stressed that they implemented format changes, making it easier for users to follow various events and interests.

All told, Wall Street responded enthusiastically, with Twitter stock popping up 13% in pre-market trading before paring gains.

Questions Remain Following Twitter Earnings

One of the biggest questions I had going into the Twitter earnings report was subscriber growth. If you’re a social media company, you live or die based on your subs.

In my opinion, this was the perfect time for TWTR to shine. Snap Inc (NYSE:SNAP), which it competes against for American youths’ fickle attention spans, recently fell back down to earth. No longer the surprise recovery story of the year, Twitter was primed to steal its thunder.

Next, we must consider Facebook, Inc. (NASDAQ:FB). The undisputed king of social media was caught violating users’ privacy and confidentiality. Despite my belief that Facebook suffers from nothing more than a political witch-hunt, public sentiment soared noticeably.

If Twitter stock was to decisively rise above the muck, this was the opportunity. But again, the key question mark was sub growth. As I discussed in previous write-ups about TWTR, its sub growth has stagnated. That’s a major problem considering that Twitter is a relatively young company compared to Facebook.

Bottom Line on TWTR Stock

Twitter shares should be surging in sub growth and user engagement. Instead, TWTR is continuing along a single-digit growth curve on a sequential, quarter-to-quarter basis since the second half of 2015.

More critically, it’s the much bigger Facebook, which has already conquered the developed world, that’s doing the growing.

Unfortunately, I didn’t get too much of a great read from the Twitter earnings report. Yes, the company is swiftly making progress, but merely moving forward isn’t enough. It’s surprising that with all their reformatting efforts, TWTR still produces ho-hum sub growth.

Therefore, even with FB under the political and public glare, I find it more palatable than buying Twitter stock.

As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.