Sometimes, a great report can lead to a bad outcome for the accompanying stock. Such is the case with social media giant Twitter Inc (NYSE:TWTR).

Twitter just reported robust first-quarter numbers that beat on top- and bottom-line expectations. The once-struggling advertising business showed strength and appears to be back on track. The still-surging data licensing business remains red hot and is driving margins considerably higher. Profitability is soaring. Even monthly active user count, which had been flat for two quarters, bumped up to a new all-time high.

But TWTR stock dropped after the numbers — by a considerable amount. As of this writing, TWTR stock is off 2.4%.

Why the move down despite the strong numbers?

Two things. One is valuation, TWTR stock is just overvalued around $30.

Two, the guide was weak. Management warned on the call that revenue trends through the balance of the year won’t look like Q1. Thus, the great Q1 was an anomaly and things will cool off throughout the rest of the year.

Hence, TWTR stock is dropping.

I think there’s more to fall. Here’s why:

Twitter’s Great Quarter

Even as a long-time bear, I can see that the quarter was actually really good for Twitter.

This company’s biggest weakness was its declining advertising business. Back in the fourth quarter of 2016, TWTR’s ad revenue growth hit the flat line. Then, it dipped into negative territory for three consecutive quarters after that.

But ad revenue growth bumped into positive territory in the fourth quarter of 2017 (+1%). Now, ad revenue growth is up by better than 20%, a much more normal rate for a digital ad player. Thus, it seems ad revenue problems are largely fixed, and that Twitter is back on a Facebook Inc (NASDAQ:FB) and Alphabet Inc (NASDAQ:GOOG) path in the digital ad world.

Perhaps more impressively, monthly active user count jumped up to 336 million. This is big, because monthly active user count had been flat at 330 million for several quarters, leaving some investors to believe that Twitter had already reached its total audience.

Clearly, that isn’t the case internationally, where the platform added 5 million new monthly users, the most it has added in several quarters. Monthly user growth should remain healthy — and that should be a tailwind for overall ad revenue growth.

Meanwhile, the data licensing business continues to ramp up. Data licensing revenues grew by 20% in Q1, versus 10% last quarter. This is huge, since the data licensing business carries significantly higher margins. Therefore, robust data licensing growth is actually a big margin driver.

Not surprisingly, then, margins continue to roar higher. EBITDA margins used to be below 30% a few years back. Now, with the ad revenue business back on track and the data licensing business scaling nicely, EBITDA margins are near 40%.

Overall, the quarter was very good on all fronts. Usage went up. Revenue growth came roaring back. And margins stayed on their upward trend.

The Weak Guide

But management sounded a cautious tone on the quarterly conference call. CEO Jack Dorsey said that the company is still working through a recovery in its advertising business, and that elevated competition in the second half of the year — probably from Snap Inc (NYSE:SNAP) — will erode growth rates.

Overall, sequential revenue growth for the rest of this year will look like 2016. In 2016, Q1 was a huge success, but sequential revenue growth was weak for the rest of the year. Thus, the rest of this year won’t live up to the hype that Q1 established.

Under the hood, it looks like that while TWTR has gotten its advertising business back on track, the competitive headwinds in the digital ad landscape are only increasing. Namely, Snap is making huge inroads while Amazon.com, Inc. (NASDAQ:AMZN) is gradually growing into a formidable player.

Therefore, competition will likely keep revenue growth around 10% over the next several years, versus the 20% recorded in Q1.

Bottom Line on TWTR Stock

TWTR stock isn’t priced for 10% revenue growth and continued margin expansion. At nearly 50 times this year’s earnings estimate, TWTR stock is priced for explosive revenue growth to persist and for profitability to ramp up to Facebook levels.

That won’t happen. As such, TWTR stock is a sell at these elevated levels.

As of this writing, Luke Lango was long FB, GOOG, SNAP, and AMZN.