Twitter Stock Is Falling Even Though Its Earnings Beat Expectations. Here’s Why.

The social media platform failed to assure investors after revenue expectations for the second quarter didn’t match those estimated by analysts.

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Twitter released its first-quarter financial results on Thursday, to mixed reception from investors. 

The social media giant announced that its total first-quarter revenue reached $1.04 billion, up 28% year-over-year. Advertising revenue, alone, totaled $899 million, with total ad engagements growing 11% year-over-year and cost per engagement increasing 19% year-over-year. 

Related: What Social Media Platform Works Best for Your Career?

“People turn to Twitter to see and talk about what’s happening, and we are helping them find their interests more quickly while making it easier to follow and participate in conversations,” Twitter CEO Jack Dorsey said in a statement that accompanied the release of the company’s results. “Average monetizable DAU (mDAU) reached 199 million, up 20% year over year and up 7 million sequentially, driven by ongoing product improvements and global conversation around current events.”

While the social media platform did report a net income of $68 million versus a net loss of $8 million, it failed to reassure investors after claiming that total revenue for the second quarter would be between $980 million and $1.08 billion. According to CNBC, analysts had expected a guidance of $1.06 billion on average. 

As a result, Twitter shares were down 12% in premarket trading on Friday, Barron points out. 

The company also said that it expects its headcount to grow 25% or more year-over-year in 2021, “ramping in absolute dollars over the course of the year.” It ended its report by optimistically asserting that it expects total revenue to grow faster than expenses this year, assuming that “the global pandemic continues to improve.” 

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