Shares of Twitter ($TWTR) traded above $20 for the first time in months, savaging short sellers on better than expected third quarter earnings and the addition of 4 million users. Shares traded up over 20 percent in intra-day trading, hitting a high of $20.63.
The San Francisco-based social media giant’s loss narrowed to $21 million, or three cents / share, vs. a net loss of $103 million, or 15 cents, year over year. Not including certain items, $TWTR booked a profit of .10c / share vs. analyst estimates of seven cents.
Revenue did fall 4% to $590 million, however this also beat estimates of $587 million.
Twitter said revenue during the quarter was driven in part by strength in its video and direct response ads. The platform has struggled to attract advertisers and its overall advertising revenue fell 8% to $503 million. Video remains its largest type of advertising and a “significant” source of growth, the company said. It has also benefited from diversifying into services like data licensing and by expanding abroad. –Forbes
— Charlie Bilello (@charliebilello) October 26, 2017
The company also guided up bigly, saying it could turn its first-ever profit next quarter – calling for adjusted profits of $220 – $240 million in the fourth quarter, well above the $200 million forecast. Twitter added “at the high end of our adjusted EBITDA range, we will likely be GAAP profitable,” which would also be the first time the company turned a profit on that metric.
I can’t wait until $TWTR hits $20 so I’m only down 50%
— Ramp Capital™♿️ (@RampCapitalLLC) October 26, 2017
Growing user base
Monthly active users rose 4% to 330 million, which the company attributed to its use of email, push notification and a more efficient timeline to help people find relevant content. Daily active users grew 14% y/y – the fourth straight quarter of double-digit growth.
That said, the company also announced that it had been overstating its user base for years
The company said it discovered that since 2014 it has mistakenly included users of certain third-party applications in its monthly active user count. So, for instance, while Twitter reported it had 328 million monthly active users last quarter, it has now revised that figure to 326 million. –Forbes
“We are ahead of my plans from January 2017 in terms of the return to revenue growth”
— Rich Greenfield (@RichBTIG) October 26, 2017
Fending off evil Russians
Under pressure over claims of Russian influence in the 2016 election, Twitter announced that it’s banning Russia Today (RT) and Sputnik from advertising on the platform:
“This decision was based on the retrospective work we’ve been doing around the 2016 U.S. election and the U.S. intelligence community’s conclusion that both RT and Sputnik attempted to interfere with the election on behalf of the Russian government,” the company said.
Twitter confirmed that the two media firms are the only ones that it found to have tried to interfere with the election. While it has banned both outlets from running ads, it will allow them to retain their accounts on the service “in accordance with the Twitter Rules.”
It added that it will donate the revenue it has received from RT advertising efforts — which it puts at $1.9 million to date — to fund research into the use of its service in civic engagement and elections. The company promised to share more details on that soon. –TechCrunch
Off-boarding advertising from all accounts owned by Russia Today (RT) and Sputnik.
We’re donating all projected earnings ($1.9mm) to support external research into the use of Twitter in elections, including use of malicious automation and misinformation. https://t.co/zIxfqqXCZr
— jack (@jack) October 26, 2017