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Twitter Inc (NYSE:TWTR) Earnings Disappoint: Stock Plummets

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Twitter Inc (NYSE:TWTR) reported third quarter earnings post market hours yesterday. The revenues were in line with analyst expectations but monthly user growth was way below expectations, which has led to disappointment on the street. The company also put out forecasts for lower revenues going forward which is being seen as a huge negative. The stock plummeted by close to 11% on the back of the earnings report in post market trading on the back of high volumes which is  a bearish indicator.Twitter
As per the reported earnings, the Monthly Average Users for Twitter Inc (NYSE:TWTR) grew by 23% to 284 million but was lower than the analyst expectation of 287 million. The mobile user growth beat analysts expectations but was unable to spark any enthusiasm. Twitter Inc (NYSE:TWTR) reported earnings per share of $0.01 which were in line with analysts expectations. The company generated earnings of $361 million as against expectations of $351 million. Mobile advertising saw good growth but was well below what competitors like Facebook are reporting at this current juncture.
Twitter Inc (NYSE:TWTR), continues to remain the second choice for brands as brands seem to have a better engagement on other social media platforms like Facebook. Many analysts believe that till the time Twitter Inc (NYSE:TWTR) is not able to show user growth and higher engagement rates quarter on quarter, investors and analysts would remain disappointed and the company would not be able to sustain at such high valuations.
Investors and analysts would shift focus to the earning report of the other social media giant Facebook slated to be released post market hours today. Most analysts believe that any outperformance in terms of user growth would force investors to shift from Twitter Inc (NYSE:TWTR) to Facebook which would mean further downward pressure for the shares going forward.

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