Twitter (TWTR) reported adjusted non-GAAP earnings of 16 cents a share for the fourth quarter of 2016, topping forecasts by 4 cents. Revenue of $717 million, however, missed Wall Street's call for $740 million in sales, fanning questions about Twitter's ability to make money from a service that has grown in prominence with the election of President Donald Trump.
Shares were down nearly 10% at midday Thursday to $16.77.
While Twitter was pleased with the NFL streaming partnership, it was just a one-year deal, and the company could face greater competition for the contract next year. Verizon (VZ) , for instance, has a mobile video contract to carry NFL games and is in the process of acquiring the core assets of Yahoo! (YHOO) , which could bid against Twitter to carry NFL games online.
Twitter did not provide revenue guidance for the first quarter but said it expected $75 million to $95 million in earnings before interest, taxes, depreciation and amortization. Large advertisers begin planning budgets in mid-January to February, Twitter management said. Competition for digital dollars has grown more intense, which will affect whether Twitter can hit the high end of guidance.
Meanwhile Dorsey said Twitter will apply AI and machine learning to make the service as simple as "looking out the window to see what's going on." The question remains whether enough users will like what they see to engage on the service daily, however, and whether Twitter can fight off the increasing competition for advertisers.