Twitter Shares Tank Despite Big Revenue and Profit Gains

What to Know Before Twitter Reports Earnings Thursday

Twitter shares fall amid concern over falling user numbers

The company said it expected total revenue of between $715m and $775m, the midpoint of which was below the Wall Street consensus of $762m.

At the same time, Twitter has seen renewed growth in its advertising business driven in large part by traction for video advertising.

Monthly active users on the social media platform fell to its lowest in two years and for a third consecutive quarter.

"2018 is proof that our long-term strategy is working", chief executive Jack Dorsey said in a statement.

Now 321 million people use Twitter, as calculated on a monthly basis, down from 330 million a year earlier.

For its current quarter, Twitter said it expected total revenue to be between $715 million and $775 million. The shares closed down $3.36 to $30.80 in regular trading, and dropped an additional 4 cents a share in after hours trading.

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Reuters reports that following the recent release of Twitter's daily active users for the first time, the company's stock price has taken a hit.

Twitter will continue to disclose their daily active user count but will no longer provide data on monthly numbers.

"The dip in MAUs also shouldn't be a surprise as Twitter publicly announced in mid-2018 that it was making more-aggressive efforts-though the work is far from done-to clean up the bots and fake users on its social network", Forrester analyst Jessica Liu wrote in an email to Barron's. The company in 2018 marked its first full year of profitability under generally accepted accounted principles. For instance, earlier this week Snapchat reported that it has stopped shedding users and is keeping the service afloat at 186 million daily users - but it's not clear how many of those daily users are monetised by Snapchat. Figures show that it brings in $909 million in revenue in the fourth quarter, a 24% increase from a year ago.

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

Twitter's slice of the digital-advertising market is expected to decline this year as Facebook and Alphabet 's (GOOGL) Google tighten their grip and (AMZN) makes significant strides, according to eMarketer. Facebook's properties - including Facebook, Facebook Messenger, Instagram, and WhatsApp - totaled 1.52 billion daily active users in the previous quarter.

Expenses increased 13 percent to $704 million as Twitter added more employees and from revenue share costs related to its video offerings.

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