NEW YORK (TheStreet) -- Twitter (TWTR) - Get Report shares are continuing to plunge 5.23% to $29.25 on Thursday after the San Francisco-based microblogging site gave lower-than-expected revenue guidance for the 2015 fourth quarter.
Sales are now projected to between the range of $695 million and $710 million, lower than analysts' estimates of $741.6 million.
The company gave this outlook along with its third quarter fiscal 2015 earnings, reported on Tuesday after the market close. Earnings were 10 cents a share on revenue of $569.2 million. These figures topped analysts' expectations of 5 cents a share on revenue of $559.4 million.
Even though the company reported strong earnings, stalling user growth is worrying investors.
Total active monthly users (MAUS) for the latest quarter came in at 320 million, below StreetAccount's estimates of 321.3 million, CNBC.com noted.
In addition, Twitter's core revenue is slowing, CNBC.com said.
Separately, TheStreet Ratings team rates TWITTER INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
We rate TWITTER INC (TWTR) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- TWTR's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 35.47%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Internet Software & Services industry average, but is greater than that of the S&P 500. The net income increased by 24.9% when compared to the same quarter one year prior, going from -$175.46 million to -$131.69 million.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Internet Software & Services industry and the overall market, TWITTER INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for TWITTER INC is currently very high, coming in at 78.28%. Regardless of TWTR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TWTR's net profit margin of -23.13% significantly underperformed when compared to the industry average.
- Despite currently having a low debt-to-equity ratio of 0.37, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 9.41 is very high and demonstrates very strong liquidity.
- You can view the full analysis from the report here: TWTR