Markets

Ouch! Why Twitter Stock Was Slammed on Thursday

What happened

Shares of social network Twitter (NYSE: TWTR) took a hit on Thursday, falling as much as 19.9%. As of 11:00 a.m. EDT, the stock was down about 19%.

The stock's slide follows the company's worse-than-expected third-quarter results. Adding to the disappointment, Twitter's fourth-quarter revenue outlook was weaker than analysts were anticipating.

A chalkboard sketch of a chart showing a stock price moving lower.

Image source: Getty Images.

So what

Twitter reported revenue of $824 million, up 9% year over year. This was at the low end of management's guidance range for revenue between $815 million and $875 million and below analysts' average forecast for revenue of $874 million. This revenue underperformance weighed on profitability, with the growth stock's non-GAAP (generally accepted accounting principles) earnings per share coming in at $0.17, down from $0.21 in the year-ago quarter. Analysts, on average, were expecting $0.20.

Twitter's lower-than-expected revenue growth reflected "revenue product issues and greater-than-expected advertising seasonality in July and August," management said in the company's third-quarter shareholder letter. The company said some glitches it is dealing with in its revenue products reduced year-over-year revenue growth by 3 percentage points or more -- and some of these issues are expected to impact Q4 as well.

Now what

Looking to Q4, Twitter guided for revenue to be between $940 million and $1.01 billion -- below analysts' average forecast for revenue of $1.06 billion.

"While we are taking steps to remediate these issues, we expect them to continue to weigh on the overall performance of our advertising business in the near term," said management.

10 stocks we like better than Twitter
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Twitter wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

 

*Stock Advisor returns as of June 1, 2019

 

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Twitter. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

TWTR

Latest Markets Videos

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More