Twitter Shares Tank 8% Despite Q3 Earnings Beat On Lackluster User Growth, Weak Guidance

Following the bell, Twitter announced its third quarter financial performance, including revenue of $569.2 million, and adjusted earnings per share of $0.10. The market had expected the popular social shop to earn $0.05 per share off of a cool $559.6 million in revenue.

Twitter shares are down sharply, following its earnings beat.

Twitter announced that it has 320 million monthly active users. That figure compares to its year-ago tally of 284 million monthly actives, and a sequentially preceding 316 million figure.

Concerns regarding Twitter’s seemingly chronically lackluster user growth has been a key investor concern. Today, the company failed to assuage those concerns. If you were confused why investors are selling Twitter shares like proverbial carb cakes to tree-fellers, that’s the reason.

Twitter has proven a monster when it comes to revenue growth. It’s top line grew 58 percent compared to its year-ago tally. But poor user growth is an inherent discount on future cash flows. And, as you will certainly recall, investors like those.

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The company derived 86 percent of its advertising revenue from mobile usage of its service, a strong figure. Twitter is among the very few companies that has managed to master pulling dollars out of small screens.

Still, investors’ chief concern remains unabated.

Looking ahead, Twitter predicts that it will have revenue between $695 and $710 million in the current quarter. That fact trails street estimates of $739.7 million by a massive, and painful deficit.

Using normal accounting techniques, Twitter lost $131.7 million in the quarter. Investors have long valued Twitter not on its GAAP metrics, but on adjusted figures to allow for oceans of share-based compensation. Perhaps that will no longer fly given the company’s other issues.