Twitter surge loses momentum
Social media giant reaches $1bn in quarterly revenue for the first time but shares then dropped by mid-afternoon trading
Twitter (TWTR) saw its share price surge by as much as 16.6 per cent on Thursday after it reported better-than-anticipated quarterly growth. However, the social media giant was not able to continue the momentum of its largest single-day percentage gain since 2017, with shares falling 3.12 per cent by mid-afternoon trading on Friday, February 7, standing at $37.21.
This slight fall underlines that 2020 will not be plain sailing for Twitter.
Twitter beat analyst predictions of quarterly revenue totalling $992m (£767m, €904m), instead cracking $1bn for the first time at $1.01bn.
Furthermore, the company witnessed a surprise increase in user numbers. Instead of the 2 million net new additions to Twitter’s monetizable daily active users base (mDAUs) forecasted by industry analysts, 7 million more accounts were added. The mDAU metric has provoked criticism in the past, as Twitter itself created it some have argued that it slants to show positive Twitter user growth.
While investors rushed to buy Twitter stock after the company beat these key industry forecasts, the social media platform still fell short of industry profit predictions. Indeed Twitter’s adjusted quarterly earnings per share actually fell on the year previous. FactSet had predicted adjusted earnings per share of 29 cents, a slight drop from the 31 cents a year before, in fact it came in much lower at 25 cents.
With competitors such as Facebook and Snapchat reporting revenue growth of 25 per cent and 44 per cent respectively, Twitter CEO Jack Dorsey maintained that the platform still has to work hard to ensure it does not fall behind.
Just as Dorsey expressed his desire to “build a company that is not as dependent on San Francisco” and to expand throughout Africa, his role in influencing the political conversation in the US has come under increasing scrutiny. This is perhaps unsurprising as the America enters an election year.
In a call with Wall Street analysts on Thursday Dorsey stated: "Misleading information is probably the biggest challenge facing us and our industry. This will be a key focus for us." This desire to battle fake news has also triggered accusations of corporate censorship of political debate.
Only a few days previously, the somewhat pro-Trump financial and political news site Zerohedge had its Twitter account with 673k followers permanently removed. The site had published a story an article detailing a theory that a Chinese scientist was linked to the outbreak of the coronavirus epidemic.
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