This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Twitter Plunges: What Wall Street's Saying

Stocks in this article: TWTR

Updated from 10:06 a.m. to include additional thoughts from Sterne Agee analyst.

NEW YORK (TheStreet) -- Though Twitter (TWTR) managed to beat first-quarter estimates and show Wall Street it's more profitable than initially thought, none of that matters if the company can't do one major thing: grow its user base.

For the first quarter, Twitter posted breakeven results on $250.49 million in revenue, as advertising revenue surged 125% year over year to $226 million. The company said mobile advertising revenue was approximately 80% of total advertising revenue, while data licensing and other revenue totaled $24 million, a year-over-year increase of 76%. Analysts surveyed by Thomson Reuters were expecting Twitter to lose 3 cents a share on $241.47 million in revenue.

The company topped 255 million monthly active users (MAUs), but that was only an increase of 14 million from the previous quarter, its first as a public company. Though that number is up 25% year-over-year, growth is slowing. In the fourth quarter of 2013, MAUs grew 30.9% year over year.

Some on Wall Street, including Goldman Sachs, were expecting much more. Analysts at Goldman Sachs were expecting around 265 million MAUs.


WATCH: More market update videos on TheStreet TV | More videos from Debra Borchardt

San Francisco-based Twitter did manage to reach 198 million mobile monthly active users during the quarter, up 31% year over year, as timeline views reached 157 billion for the first quarter of 2014, an increase of 15% compared to the prior year's quarter. Advertising revenue per thousand timeline views reached $1.44 in the first quarter of 2014, a year-over-year increase of 96%.

In an interview with Carl Quintanilla on CNBC, CEO Dick Costolo said Twitter was already a mainstream platform, and the company is working on three major initiatives, including simplifying the new user process to be much more mobile phone based, the recommendations sent, and the way Twitter organizes content for new users will drive growth. "The beauty of Twitter is that everyday, in countries around the world, Twitter is front and center, it's ubiquitous, in front of people, everyday," Costolo said during the interview.

Shares were plunging in pre-market trading, falling 12% to $37.49.

For the second quarter, Twitter expects revenue to be between $270 million and $280 million, with adjusted EBITDA between $25 million and $30 million. For the full year, revenue is projected to be between $1.2 billion and $1.25 billion, with adjusted EBITDA between $180 million and $205 million. It also expects capital expenditures between $330 million and $390 million.

Analysts surveyed by Thomson Reuters are expecting Twitter to lose 1 cent a share on $275.31 million in revenue for the second quarter, with EBITDA of $30.58 million.

Following the quarter, analysts were positive on the long-term viability of the company, but many lowered price targets, given the declining user base growth. Here's what some had to say:

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs