Twitter posts its first quarterly profit ever, so why does its stock tumble?
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2014-02-07
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Twitter surprised analysts on Wednesday by posting its first quarterly profit. But that wasn't enough to satisfy investors, who sent the social media company's stock tumbling 17 percent in extended-hours trading.
Twitter's stock floated at $26 in its November IPO and peaked at $74.73 in late December. On Wednesday, in its first quarterly earnings report as a public company, Twitter posted fourth quarter earnings of 2 cents per share on revenue of $243 million, easily surpassing analysts' predictions of a loss of 2 cents per share on revenue of $218 million.
But Twitter also posted its worst active user growth in three years along with disappointing user-engagement statistics. Twitter added 9 million active users per month in the fourth quarter, the worst figure since the final quarter of 2010. Twitter timeline views, a key measure of user engagement, decline for the first time ever, from 159 billion to 148 billion.
That tilted the balance between the bulls and the bears, or between those who see Twitter as an overvalued niche product and those who believe it the company is a legitimate threat to Facebook.
On Monday, Barron's reported that over the previous 22 days, investors had opened 87 puts for every 100 call positions. "When this happens," the article noted, "associated stocks often trade with fury in reaction to news as investors adjust positions in puts and calls to reflect the new reality."
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Twitter's stock floated at $26 in its November IPO and peaked at $74.73 in late December. On Wednesday, in its first quarterly earnings report as a public company, Twitter posted fourth quarter earnings of 2 cents per share on revenue of $243 million, easily surpassing analysts' predictions of a loss of 2 cents per share on revenue of $218 million.
But Twitter also posted its worst active user growth in three years along with disappointing user-engagement statistics. Twitter added 9 million active users per month in the fourth quarter, the worst figure since the final quarter of 2010. Twitter timeline views, a key measure of user engagement, decline for the first time ever, from 159 billion to 148 billion.
That tilted the balance between the bulls and the bears, or between those who see Twitter as an overvalued niche product and those who believe it the company is a legitimate threat to Facebook.
On Monday, Barron's reported that over the previous 22 days, investors had opened 87 puts for every 100 call positions. "When this happens," the article noted, "associated stocks often trade with fury in reaction to news as investors adjust positions in puts and calls to reflect the new reality."
------------------------------------------------------------------------------------------------
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For news that's fun and never boring, visit our channel:
https://www.youtube.com/user/TomoNewsUS
Subscribe to stay updated on all the top stories:
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