(Reuters) – Micro-blogging website operator Twitter Inc (TWTR.N) reported quarterly revenue below Wall Street expectations, causing shares to drop sharply in the last hour of trading.
Twitter’s results were leaked early by Selerity, a financial data company; they were scheduled for release after the close of trading. Selerity leaked results from Microsoft once in 2011.
Twitter’s net loss widened to $162.4 million, or 25 cents per share, in the quarter ended March 31 from $132.4 million, or 23 cents per share. The company also noted a significant decline in “ad engagement growth,” and its revenue of $436 million was well short of analyst expectations for $458 million.
Shares lost 15 percent to $43.16.
TODD SCHOENBERGER, MANAGING PARTNER OF LANDCOLT CAPITAL LP IN NEW YORK:
“The fact that the results were leaked isn’t good, because it raises a lot of security and privacy questions. If it can’t keep its results safe, can it protect its users? This just shows that the company is poorly managed.
“I’m confused about how Twitter can continue making money. Not only was the outlook bad, but it looks like the user base is dropping, and Twitter is nothing without user growth. I’m very bearish on the stock.”
JERRY JORDAN, PRESIDENT AND SENIOR PORTFOLIO MANAGER FOR HELLMAN, JORDAN MANAGEMENT CO., INC IN BOSTON:
“I am surprised it is down this much …they still grew revenues a lot and remember it tookFacebook a while to get monetization right. The problem with Twitter is that they cannot figure out how to keep people… I go to Facebook a couple of times a day, I go to Twitter a couple of times a week… Also, Twitter is an ‘also ran.’ It’s like comparing the FX channel with HBO. FX has some great shows, but it is no HBO.”
BRIAN JACOBSEN, CHIEF PORTFOLIO STRATEGIST, WELLS FARGO FUND MANAGEMENT, MENOMONEE FALLS, WISCONSIN:
“The results were disappointing. Maybe the growth rate of users is not as where they used to be. It doesn’t inform us of its competitors in the social media space. Twitter is not a big enough stock to swing the (Nasdaq) index. Tomorrow’s GDP and FOMC statement will have a more dominant impact on the market.”
On the leak via Twitter:
“It raises questions about its internal control…That’s probably the most poetic aspect of it.”
KIM FORREST, SENIOR EQUITY RESEARCH ANALYST, FORT PITT CAPITAL GROUP IN PITTSBURGH:
“I think the MAU numbers are really disappointing. As are the revenues – I think that is the main problem with the stock. You’ve got to show advertisers that it is worth the time and money and I’m pretty sure that the way Twitter works isn’t very rewarding to advertisers.”
ADAM SARHAN, CHIEF EXECUTIVE OF SARHAN CAPITAL IN NEW YORK:
“This was a big disappointment, especially the guidance going forward. Investors had a one-two effect, because not only was the guidance so weak, but it was released early. Investors were legitimately caught off guard, and there was nothing in the results that seemed optimistic.
“Twitter is still growing, but if Twitter isn’t optimistic about its results, why would investors be optimistic? I’ve owned the stock in the past but actually sold it earlier today. I was expecting the stock to beat and to rise after that, but once I saw the erratic action I sold ahead of the halt. I got lucky that I missed this huge gap down.”
SHELBY SEYRAFI, ANALYST AT FBN SECURITIES IN NEW YORK:
“Investors are surprised by the revenue miss and the guidance and they had some newer products that didn’t meet expectations.”
JACK ABLIN, CHIEF INVESTMENT OFFICER, BMO PRIVATE BANK, CHICAGO:
“Twitter is one of those cases where you are better off as a customer than a shareholder. It’s a great service but they are not able to monetize it. Shareholders have been patient. This has prompted some shareholders to throw in the towel.”
ARVIND BHATIA, ANALYST AT STERNEAGEE CRT IN DALLAS:
“The revenue miss is going to concern people. If it’s $436 million, that would not only mean they missed the consensus but missed their own guidance, which was $440 million to $450 million. Had they come within that range, they could say they came within their expectations and the consensus was too high. That number is going to put pressure on the stock. It’ll probably go down more.”
VICTOR ANTHONY, ANALYST AT AXIOM CAPITAL IN NEW YORK:
“It’s definitely a negative, there’s no way to spin that. They missed their own guidance for the first quarter and now they’ve taken down their full-year revenue guidance.
“The one positive is that the MAU (monthly active users) number came in line with expectations … Something has clearly changed from the time they gave the forecast in February and in between February and March. It will put immense pressure on the management team throughout the year to better monetize those user platforms.”