Published: Fri, February 08, 2019
Money | By Ralph Mccoy

Twitter shares tumble on forecasts for weaker revenue, higher costs

Twitter shares tumble on forecasts for weaker revenue, higher costs

"Yes, total user numbers are down, but we've known for a while now that Twitter has a fake-users problem and is trying to deal with it, so that shouldn't come as a surprise to anyone", said Clement Thibault, analyst at global financial platform Investing.com.

Despite the growth in 2018, investors are concerned with Twitter's forecast for the first quarter; the company predicted ad revenue fall to between $715 million and $775 million.

Some analysts said it was time for Twitter to show the results of efforts to safeguard its platform.

Twitter expects capital expenditure of between $550 million and $600 million in 2019, well above analysts' average estimate of $415 million.

Twitter, for the first time, revealed the number of its monetizable daily active users: 126 million. It has hundreds of millions of daily users and many rely on it to ... If a Snapchat user taps a message notification, reads that message in the app, and then closes out, they are now a daily active user, but they at no point had the chance to see an advertisement, which is what advertisers really want to know from the data.

Twitter Inc forecast first-quarter revenue that was below analyst estimates on Thursday and said the number of users fell in the fourth quarter, sending its shares down 6 percent in premarket trading.

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While directly comparing the number of daily active users with those of Twitter's peers may be hard as there is no industry standard on how social media platforms measure the metric, Snap Inc reported earlier this week that it had 186 million daily active users in the fourth quarter.

The short-messaging platform said it posted a $255 million profit in the final three months of 2018, compared with $91 million a year earlier, as revenues rose 24 per cent to $909 million.

Monthly active users averaged 321 million, decreasing by 9 million from the same period a year earlier and down 5 million from the third quarter.

Shares were down more than 10 percent at $30.56 in midday trading.

Total advertising revenue surged 23 percent to $791 million in the quarter, with more than half of that figure coming from video ads placed by corporate clients. $791 million of that figure comes from advertising revenue, split $425 million in the USA compared to $366 internationally - while data licensing making up the other $117 million.

Excluding some items, Twitter reported quarterly profit of 31 cents per share, beating the average estimate of 25 cents.

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