Twitter stock plummets 13% on slow user growth
Twitter stock plunged during after-hours trading Tuesday after the company reported continued slow user growth during the third quarter.
The San Francisco-based company reported quarterly revenue of $569 million, up more than 57 percent from the same period last year, and earnings of 10 cents per share minus some expenses. Both metrics beat Wall Street's projections. Analysts had been expecting revenue of just under $560 million and earnings of 5 cents per share excluding certain expenses, according to Thomson Reuters.
But the company missed on user growth. The company had 320 million average monthly active users, up 11 percent year-over-year. That's below the 324 million that Wall Street was expecting and it represents only 4 million new average MAUs since last quarter. Excluding users who Tweet via texting, known as SMS fast followers, Twitter average MAUs grew just 8 percent to 307 million.
Twitter's is projecting that revenue during the fourth quarter will be in the $695 million to $710 million range, which falls below Wall Street's expected $740 million.
This was Jack Dorsey's first earnings call as permanent Twitter CEO. He also lead the earnings call in July when he was interim CEO following the departure of Dick Costolo.
In the short time since he was named to the position, Dorsey has overseen the launch of Twitter Moments, a new feature that aggregates tweets about real time news and other stories happening on the platform, and announced plans to layoff more than 330 employees, or approximately 8 percent of the company. Twitter has been plagued by slow user growth and Dorsey sees these moves as a way to simplify the servie to better position it with potential new users.
The earnings call will also serve as preparation for Dorsey as he plans to take his other company, payments startup Square, public. Investors are likely to ask about how he plans to split his time between running both companies.
Twitter shares were trading down more than 11 percent during after-hours trading immediately following the earnings release. The company's shares closed out the day up 45 cents, or a little more than 1 percent, to $31.34 on the Nasdaq.
More to come...