Twitter is out of the woods — or so it seems. Following yesterday’s impressive earnings report, the company has had a quick and clear reaction from the stock market. Yesterday evening, Twitter (NYSE:TWTR) was up 30 percent in after-hours trading. This morning, shares opened at $47.01, 21.8 percent above yesterday’s closing price of $38.59 — it’s a four-month high.
This performance is a huge relief for the company as it went through a difficult first half of 2014. Many people didn’t believe that it had what it takes to show improvements when it comes to user growth and revenue growth.
But with 271 million monthly active users, the company gained 16 million users in Q2 compared to 14 million in Q1. In other words, user growth is accelerating.
On the revenue front, things are looking good as well, as the company beat the analysts’ expectations. It reported $312 million in revenue and now expects between $330 and 340 million for Q3. The strong guidance is an even better signal for investors than this quarter’s performance.
Back in December, I wrote that the honeymoon period between the NYSE and Twitter was over. After reaching an all-time high of $74.73, the company needed to show actual results. That’s why shares have been slowly but surely falling every since.
Following its first two earnings reports, the company dove. In May, shares even tanked more than 11 percent — long-time investors cashed out.
Today’s news is a huge morale boost for the company. Twitter surprised everyone with its earnings report, and in a good way. Now, the team can focus on long-term prospects instead of fixing the most prominent problems.