Twitter (TWTR) Stock Breaks to the Downside Following Q1 Earnings

Shares of Twitter (NYSE: TWTR) are down 12% in pre-market hours trading on Friday after the company reported Q1 (March) EPS that beat analysts’ forecasts and revenue but missed on user growth expectations. The San Francisco-based company also provided lower revenue guidance for the second quarter.

Twitter said its net income came in at $0.16 per share on revenue of $1.04 billion. This compares to earnings of $0.11 per share on revenue of $808 million a year ago. Analysts anticipated EPS of $0.14 on revenue of $1.03 billion.

The social media platform also reported a profit of $68 million, and diluted EPS of $0.08. This contrasted with a net loss of $8 million, and diluted EPS of ($0.01) in the same period a year ago.

Net cash in the quarter was $390 million, 58% higher compared to the same period of the previous year. Adjusted EBITDA printed $294 million, up 39% over forecasts of $276 million.

What left street analysts disappointed about Twitter’s March quarter were key metrics like guidance and user growth rate. The company said it sees Q2 revenue of $980 million to $1.08 billion. Analysts were expecting guidance of $1.06 billion on average. Twitter’s monetizable daily active users grew by 7 million from Q4 to 199 million compared to 166 million y/y, but still fell short of analyst’s expectations of 200 million.

Twitter’s overall more-moderate sales and earnings growth relative to competitors like Apple (AAPL) and Facebook (FB) also left both investors and Street analysts less enthusiastic by the company’s results.

Piper Sandler analyst Thomas Champion said that “a more decisive beat on user growth would have instilled confidence.” He reiterated his neutral rating on the name but cut the 12-month price target by 5 points to $66 a share.

Price Action

Twitter shares lost $0.61, or 0.93%, by the close of trading Thursday and changed hands at $65.09 each. Ticker is down $8, or 12.29%, in the before-hours session.

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