Miraculously managing to beat user growth expectations (313mm MAUs vs 312mm MAUs exp) and EPS (+13c vs +9c exp), Twitter stock is plummeting after-hours after slashing Q3 revenue (and EBITDA) guidance drastically (from $681.4m to between $590 and $610mm). TWTR is trading down 11% after-hours…
As Bloomberg reports, Twitter said third-quarter revenue will be less than analysts expected Tuesday, a sign it’s struggling to win more advertising dollars as user growth stagnates.
The company forecast third-quarter revenue of $590 million to $610 million. Analysts were looking for $681.4 million.
Monthly active users were 313 million in the second quarter, up from 310 million during the prior quarter. That beat the average analyst estimate for 312 million, according to data compiled by Bloomberg.
Second-quarter sales grew 20 percent to $602 million, compared with the $607 million estimated by analysts.
Profit, excluding some items, was 13 cents per share. Analysts forecast 9 cents on average.
So to summarize, Q2 mixed…
- *TWITTER 2Q ADJ. EPS 13C, EST. 9C (BIG BEAT)
- *TWITTER 2Q REV. $602M, EST. $607.0M (MISS)
- *TWITTER 2Q MAUS 313M , EST. 312M (SMALL BEAT)
But Q3 guidance is a disaster…
- *TWITTER SEES 3Q REV. $590M TO $610M, EST. $681.4M; SHARES FALL
- *TWITTER SEES 3Q ADJ EBITDA $135M TO $150M, EST. $168.8M
And the reaction…
Bloomberg notes the strategic view…
Twitter is working to make its service more appealing to a wider group of people after several quarters of stagnant user growth. Without a larger audience, the company may struggle to significantly increase advertiser spending. To combat that, Twitter is trying to create another purpose for its site: streaming live events. That way, the company can draw from advertisers’ video budgets — often larger checks they normally write to sites like YouTube and Hulu — instead of competing so directly with Facebook Inc.
The company has done several streaming deals. This week it said it would stream games for Major League Baseball and the National Hockey League. Earlier this year, Twitter paid $10 million for the rights to stream National Football League games on Thursday nights. Facebook and Snapchat have also made live events a priority.
Meanwhile, Twitter Chief Executive Officer and co-founder Jack Dorsey has other challenges, like executive defections and analyst speculation his company may be acquired. He’s also faced the departures of several high-profile Twitter users this year after they were harassed. In the most recent incident, Twitter had to block Milo Yiannopoulous, who went by @nero on the service, after targeted abuse against actress Leslie Jones. Finding a better fix for the problem has been one of Dorsey’s top priorities in 2016.
Good luck Jack
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