Twitter’s earnings results were leaked early on Tuesday, and the earnings news sent shares plummeting by nearly 26 percent. After a recovery that cut the loss to 18 percent, shares fell again Wednesday. Is it time to sell?
A professor at London’s Warwick Business School says “No.”
Sotirios Paroutis, of Warwick Business School, an Associate Professor of Strategic Management who studies Twitter, offered his insight via email from Warwick:
“Twitter missed expectations and lowered its guidance for its 2015 results, but adjusted EBITDA increased to $104 million, which is above the previous forecast range of $89 million to $94 million.
“Plus, Twitter is well positioned to make the most of the growth in mobile users, as they have traditionally focused on their mobile experience. “Its number of monthly active members (MAUs) actually rose 18% year-over-year to 302 million, compared to 288 million in the previous quarter, and mobile users account for approximately 80% of these, while international users (non-US) are about 78% of these.
“From the 14 million new users compared to the previous quarter, 11 million were international users.“As Twitter enters maturity, it has tried to broaden its appeal to advertisers and to convince investors that its business model can deliver long-term value to shareholders.
“Their strategy focuses on three priorities: strengthening the core, reducing barriers to consumption and delivering new apps and services.
“This is a good mix of priorities: focusing on preserving Twitter’s core values and at the same time keeping the service fresh through innovative offerings.
“Advances across three areas have helped Twitter deliver growth in its revenues and user-base: mobile, international, and ad engagements.”
