Twitter shares tumble on forecasts for weaker revenue, higher costs

Twitter sign is draped on the facade of the New York Stock Exchange before its IPO in New York. — AP

Twitter sign is draped on the facade of the New York Stock Exchange before its IPO in New York. — AP

Twitter Inc forecast first-quarter revenue that was below analyst estimates on Thursday and said the number of users fell in the fourth quarter, sending its shares down 6 percent in premarket trading.

"We enter this year confident that we will continue to deliver strong performance by focusing on making Twitter a healthier and more conversational service", he added.

Despite the growth in 2018, investors are concerned with Twitter's forecast for the first quarter; the company predicted ad revenue fall to between $715 million and $775 million. Twitter claimed 321 million monthly users, down 9 million, or more than 2 percent from the same time previous year.

Twitter shares tanked almost 10 percent Thursday after the company warned of weaker-than-expected revenue and said it will stop reporting its closely watched monthly active user metrics.

Twitter has said it identified much less manipulation on its service during the 2018 USA midterm elections from bad-faith actors located overseas than two years earlier during the presidential campaign.

On a conference call with analysts Thursday, CEO Jack Dorsey reiterated his belief that Twitter's ongoing health initiatives will be a "long-term growth vector" for the company.

Twitter said it would stop using the monthly user base metric and instead report "monetisable" daily active users in the USA and worldwide.

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Twitter said it would stop disclosing monthly active users and switch to reporting active daily users instead. The shares closed down $3.36 to $30.80 in regular trading, and dropped an additional 4 cents a share in after hours trading.

Instagram alone had 500 million daily active users in 2017 (the most recent data we could find) and is most likely getting even more than that today.

By region, average U.S. MAU in the quarter was down 3 percent from a year ago to 66 million. Twitter's revenue for the holiday quarter jumped 24% to $909 million.

That compares to Facebook's 1.5 billion daily users and Snapchat's 186 million.

Twitter rarely talks about the number of Daily Active Users, saying that it's a poor metric that would easily be misinterpreted.

Twitter has made its first annual profit in its 13-year history but another fall in the number of its users and a disappointing sales forecast took the gloss off the results and sent its shares down almost 10 per cent. This represents a top-and-bottom line beat as the Street was expecting the company to earn 25 cents per share on revenue of $868.1 million.

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