
Twitter Reports Weak Earnings and the Stock Is Crashing - pierrealexandre
http://www.bloomberg.com/news/articles/2015-04-28/twitter-falls-short-on-promise-to-speed-up-user-growth
======
dismal2
> “It calls into question why they didn’t see this coming,” said Victor
> Anthony, an analyst at Axiom Capital Management, who has a buy rating on
> Twitter’s stock. “I don’t think anyone ever questioned their ability to
> generate revenues.”

Hmm, I thought everybody did? I guess wall street really does have a clear
view of this whole tech scene.

~~~
austenallred
>Twitter cut full-year revenue guidance to $2.17 billion to $2.27 billion,
from the previous range of $2.3 billion to $2.35 billion.

I still don't question Twitter's ability to generate revenue, because they
will generate over $2 Billion this year. I question their ability to meet
Analyst expectations, sure, but they _already have_ revenue. Billions of
dollars of it.

They beat their earnings estimate by 57% and missed their revenue estimate by
4.7%. This is by no means the definitive death knell so many people on HN are
making it out to be. Wall Street is a crazy place and expectations were sky
high and yes the stock dropped a lot, but Twitter will survive and is doing
just fine.

It seems like HN is convinced the company is eternally doomed and will never
make money. That notion has been pretty much proven false. Twitter makes
money; they're just behind where people thought they would be.

~~~
coldcode
Twitter is incapable of ever meeting the Price-Sales multiple of 20X+ until
the stock drops closer to reality. The average stock is less than 2X. Apple is
around 3X and has never in it's history been greater than 7X. What can Twitter
do to multiply their sales by 5X? It's great they make some money but the
stock price is unrealistic.

~~~
erikpukinskis
Apple is a bad comparison because the near-death-experience in the 90s
combined with its contrarian attitude has put it in on a very short leash with
Wall Street. I mean, aside from its years in the desert Apple has performed as
well and as consistently as any tech company over long stretches. And yet it's
P/E is consistently a third of Google's or Sony's.

And it literally won the war. They take the lions share of profits in the
personal computer market and they have a huge moat. You could argue they will
be in trouble when personal computing devices stop changing so quickly and are
fully commodified, but I can't imagine that's within the next two decades.
Honestly I find it weird their P/E isn't higher.

------
ceejayoz
[https://twitter.com/Selerity/status/593136296236752896](https://twitter.com/Selerity/status/593136296236752896)

"Today’s $TWTR earnings release was sourced from Twitter’s Investor Relations
website [https://investor.twitterinc.com](https://investor.twitterinc.com) .
No leak. No hack."

Looks like someone found a draft post. Yeesh.

~~~
jonknee
Even better is that NASDAQ runs Twitter's IR site...

~~~
arielm
Major ouch. Although it's pretty funny to see that their first reaction was to
call it a leak before investigating...

~~~
ubersync
A leak's a leak. Accidental of intentional.

~~~
arielm
I think a leak requires intent.

------
interesting_att
Did anyone expect any different from Twitter? Their main platform needs
significant improvement.

Biggest disadvantages for Twitter:

1) People are flocking to other social messaging apps, especially the mobile
variants (Snapchat, Instagram, etc). I suspect because its coolness factor is
waring off, because of rampant trolling, and poor discovery.

2) Most of Twitter advertising is useless, in large part due to poor data
collection. I have yet to see any performance campaigns really kill it on the
platform. Brands only advertise because they are easily misled by agencies.

Can anyone offer realistic suggestions to help improve the company's outlook?
Here are some random thoughts:

1) Trying to take a piece of the mobile ecosystem seems like a smart move, as
they show genuine expertise. I liked their acquisition of MoPub and every
developer seems to use Crashlytics. People seem to use Periscope and Vine
often, as well. This could lead to a lucrative formula: Making apps easier to
build with their tools, nudge developers to monetize through MoPub, and then
take the plethora of learnings from the latest mobile craze and build an
awesome new app.

2) They need to better monetize news, not just social interaction. How much
content is written today because "Person said X offensive statement on
twitter"? Twitter gets $0, despite the fact most news comes from them. Maybe
try to attempt to be the Bloomberg Terminal for all news going forward? How
about trying to beat Nielsen (16bn market cap) in actually monitoring
sentiment? This obviously would take some ingenuity, but could be very
rewarding. They seem to be trying this strategy, with some of their recent
acquisitions.

3) Find out what other countries want. There is still a huge untapped marked
in the 3rd world. Twitter could expand there by offering new services.

4) Somehow disincentivize blowhards from going on Twitter too often.

~~~
IndianAstronaut
>Most of Twitter advertising is useless

My comlany stopped doing Twitter advertising. It is basically marketers
marketing to eachother. The whole thing is gamed. Not to mention it is opaque,
expensive, and clunky to use. Sharp contrast with say google adwords.

------
Lorento
I can understand why investment type people like y-axes that don't start at
zero - they're usually interested in tiny changes a long way from zero. But
for the general public to watch? If you didn't already have an up to date
feeling for the price of Twitter shares, then this whole report is meaningless
without finding the -$9 and doing the calculation yourself. She even points
out that it's now $40 but not what it was before. Are most viewers really that
tuned into the market that they know the prices of things before they're in
the news?

Turns out this is only something like 20% drop making it the same as February
this year! Nothing spectacular at all. It endured a similar crash in October
last year and took a few months to recover.

[https://www.google.com/webhp?sourceid=chrome-
instant&ion=1&e...](https://www.google.com/webhp?sourceid=chrome-
instant&ion=1&espv=2&ie=UTF-8#q=twitter%20share%20price%20history)

~~~
frostmatthew
> Turns out this is only something like 20% drop making

A 20% move is huge for _any_ stock (most don't move that much in a _year_!),
and it's certainly far outside the norm for TWTR[1].

[1]
[http://stockcharts.com/h-sc/ui?s=TWTR&p=D&b=5&g=0&id=p298069...](http://stockcharts.com/h-sc/ui?s=TWTR&p=D&b=5&g=0&id=p29806926087)

------
lucb1e
My personal reason for using Twitter less is the degradation of the website.
Using J to scroll down has always been buggy with image posts and often resets
to the first post, but newest 'feature' includes not being able to view
threads inline. When clicking a tweet it will go to the details page (opening
in a new tab doesn't work) and when going back you have to scroll down
possibly hundreds of tweets. When opening images inline (that still works in
most cases) the page scrolls up a random amount, anywhere between 5 and 50
tweets it seems. Copying image URLs using right click also doesn't work
anymore when viewing an image (only from the tweet list can you copy it, then
manually editing the URL to include ':large' works). And of course the ads,
even though I don't see them, the J key doesn't skip them so I know they're
there.

Overall, the user experience becomes worse and worse. They said Twitter makes
a good replacement for RSS feeds, but honestly I wish my Twitter feed was an
RSS feed to be loaded in any reader I like.

~~~
z-e-r-o
I started using
[https://tweetdeck.twitter.com/](https://tweetdeck.twitter.com/) especially
for the above reasons. Somehow the JS is way more reliable on the tweetdeck
site. It's a pity that even the widest column setting is way too narrow, it
still feels more like a "management interface" than a Twitter home feed.

~~~
mayneack
does tweetdeck have ads?

------
cryowaffle
Ya'll need to chill out and look at a price chart of TWTR over time. This is
very common run-of-the-mill volatility.

Source:
[http://stockcharts.com/h-sc/ui?s=TWTR&p=W&b=5&g=0&id=p870792...](http://stockcharts.com/h-sc/ui?s=TWTR&p=W&b=5&g=0&id=p87079254187)

~~~
minimax
Another way to look at it is that Twitter's first trade on the NYSE in
November 2013 was at $45.10, and today, almost a year and a half later, it
closed at around $42. That is not a whole lot of return for what is supposed
to be a growth stock. It's also not a particularly great story to tell
prospective employees if you're trying to attract them with stock-based
compensation.

~~~
sukilot
Public companies give RSUs to employees. Which don't need a grown story.

~~~
nandemo
If the share price isn't going up, one would rather get paid in cash.

~~~
marssaxman
One would generally always rather get paid in cash, which can be used to
invest in a diverse portfolio of valuable investments.

------
upofadown
>Twitter cut full-year revenue guidance to $2.17 billion to $2.27 billion,
from the previous range of $2.3 billion to $2.35 billion.

I find it astonishing that what is basically a short message broadcast service
can generate billions of dollars of revenue. So I think that they have to be
doing something very right. Perhaps everyone is anticipating the inevitable
next hot thing a little bit too hard.

~~~
borgia
>I find it astonishing that what is basically a short message broadcast
service can generate billions of dollars of revenue.

Basically a short message service? That's naive. Twitter is a marketing
platform with 300m people signed up to receive marketing materials, people who
also readily provide the platform with the details of what they like/would
likely click on/spend money on, where they are in the world, what age they
are, what gender they are and more. Of course it's extremely valuable.

~~~
lotsofmangos
I like Stewart Lee's take on it.

 _" a government surveillance operation run by gullible volunteers, a Stasi
for the Angry Birds generation”_

~~~
tomjen3
That is a rip of of the Onion:

[http://www.theonion.com/video/cias-facebook-program-
dramatic...](http://www.theonion.com/video/cias-facebook-program-dramatically-
cut-agencys-cos,19753/)

~~~
lotsofmangos
Is a different take on a similar joke -
[https://www.youtube.com/watch?v=7XpvH-j9BHg](https://www.youtube.com/watch?v=7XpvH-j9BHg)

The idea that social networks are useful for surveillance and the joke that
the users are just useful idiots, massively predates the onion sketch as well
though.

------
Tiktaalik
Random question: How do I stop videos from auto starting on Bloomberg? I'm
running Safari with no Flash, and have Ad-block on. Video doesn't start, but
audio does.

Super Annoying.

~~~
dredmorbius
I've taken to identifying the VPO (video platform organization) and their
hosts, and adding them to my /etc/hosts blocklist.

[https://plus.google.com/104092656004159577193/posts/QZ1vdpwB...](https://plus.google.com/104092656004159577193/posts/QZ1vdpwBpZc)

These will catch most of them:

    
    
        0.0.0.0                 www.autofixinfo.com     # Autoplay video
        0.0.0.0                 c.brightcove.com        # Autoplay video
        0.0.0.0                 player.theplatform.com  # Autoplay video
        0.0.0.0                 link.theplatform.com    # Autoplay video
        0.0.0.0                 ci-2862d2c8d6-68f418d2.http.atlas.cdn.yimg.com  # Autoplay video
    
    

If you _must_ watch the vids, downloading via yt-download (from another host
or vm not using that hosts file) frequently works.

~~~
alphapapa
Why not use NoScript and/or RequestPolicy instead? That way, all such sites
are blocked by default, and you can temporarily or permanently enable
individual ones with a couple of clicks.

~~~
dredmorbius
I do, but they don't work on all sites in all situations.

I find communicating to VPO's that I'll block them for this shit, and
advertising this fact and methods, might have some positive effect.

There are a small number of video providers for all the usual 80/20 rules. A
half dozen or so nails virtually everything frequently used.

And very little video is even worth viewing.

------
themodelplumber
This probably shouldn't be surprising news but it has some shock value.
Twitter is very close to what some would consider a model civic communications
platform. I remember hearing one tech pundit refer to it as "citizen's band
radio for the 21st century." The idea that such an effective tool needs to
generate revenue a la Facebook seems odd, even though I understand that it
operates like any other business entity.

~~~
marssaxman
I would not consider a proprietary, monopoly-controlled communications
platform to be a model for anything.

~~~
themodelplumber
I don't see why not. You can take the result of some effort and say, OK, this
is a model for the kind of result we'd like, but are not currently getting
from our more open, idealistic systems. There would probably be many benefits
to such, err...open ways of thinking.

------
gstar
I bet the mood there is REALLY sombre.

Leak or not, missing earnings is a career limiting move for management. And it
was a HUGE market reaction for an earnings miss, kinda implies that the market
isn't convinced by the fundamentals of the stock.

Ouch!

------
fixxer
Irony is a black box trading system listening to the firehose and picking up
that nugget.

------
dinosammy
The reaction makes a lot of sense. Their revenue is miniscule compared to a
$34 billion market cap. That market cap can only be justified by massive
future revenue growth. The results are indicative that the future revenue
growth might not be as massive as people thought it was.

------
swingbridge
Twitter is currently valued at >10x revenue, is unprofitable and future
revenue projections are being dialed back. The hype has worn off. It's going
to get real ugly real fast unless they can post some decent results real fast.

------
alexashka
Meh, I don't get it.

They're making money, they grew to 18% more active users (that sounds like a
lot), what seems to be the problem?

~~~
wutbrodo
The way stock prices work is that the price of a company's stock (or more
relevantly, the price*num_shares) incorporates their current earnings as well
as their potential future profits (which is driven by the company's forecasted
growth). Updates on how the company is actually performing (e.g. earnings
releases) are a chance to get concrete information that allows everyone to
update their expectations of future growth. If the market at large was
expected some number $N, and the actual released figure less than $N, then
self-evidently the expected growth would be adjusted down.

If I expect that I'll have 50,000 dollars in the bank a year from now
(starting from 0), and 6 months in I only have 15,000 dollars, then naturally
I would adjust my expectations downwards.

~~~
alexashka
Ok but from my understanding - you get to buy and sell stocks. So when twitter
says that instead of earning say 300 million, they a bit less like 280, why is
this a big problem?

Did they expect the stock to be valued higher and because it has not lived up
to that, they're selling it and buying a different stock that will do that?

~~~
swingbridge
It's both what they just did and what they are trending towards in the future.

twitter is currently valued at say $35 billion then long term to justify that
valuation per what the stock market demands long term they need to
consistently generate around 2 billion a year in profit. If they do really
well and have say a 25% margin they'd need $8 billion a year in revenue to
operate at that level. Current revenue projections are closer to 2 billion and
are being scaled back by executives and they're not consistently profitable at
all.

There's a big gap between where they need to be to support the current stock
price and where they are (and seem to be heading in the near and mid term).
That's why the stock is under a lot of negative pressure.

~~~
alexashka
Thank you, that cleared it up for me

------
PublicEnemy111
I think the writing is on the wall for Twitter. The younger generations are
increasingly flocking to snapchat, yik yak, and similar apps. I never hear of
anyone using it anymore(college student here). I would have stopped facebook a
while back as well if I didn't use OAuth for damn near everything

~~~
themagician
Twitter, Facebook, Google+, Snapchat, Instagram, Whatsapp, etc… they are all
just iterations of the same basic things: messaging, file (photo) sharing,
identify, news. The writing is on the wall from inception. The value is in the
community, but community is amorphous and not really ownable or defendable.

The only real difference I've noticed in the last, lets say 15 years, is that
people have grown up with things now and so they seem "easier" and more
"accessible." To some extent that's true, but it's mostly the people that have
changed not the products or services themselves.

I don't really believe that any "internet company" is sustainable. The value
they add exists at a point in time and decays. Get in and get out. The basic
functions are too easy to copy and there's no guarantee you keep your
community unless you do so by force.

At some point you either become a media company that caters to specific
demographics (the lookalike audience you acquired), or you disappear.

~~~
alphapapa
I think your comment is quite insightful. Just think about how many times
instant messaging has shifted from one most-popular platform to another. IRC,
ICQ, AIM, MSN, Skype...SMS?...Facebook?...WhatsApp? It's just a constant shift
from one service to the next. Obviously this cycling will continue forever.
Therefore it would seem unwise to invest in any one platform too heavily, if
at all--as a user or an investor.

~~~
cft
Skype - was released in 2003, and is very popular among teens 12 years later.
These users were 2 years old when Skype was released.

~~~
alphapapa
Kind of an anecdote, but still interesting, thanks. The question is, then, for
how long will Skype be as popular as it currently is? And, will these teens
keep using it as they age? If so, will Skype's demographic tend to follow
them?

Of course there are a million variables. I mean, AIM is still around, right?
But it's no longer the "default" IM system, while a few years ago, it seemed
to be (to me, anyway).

------
arasmussen
"Crashing" is a bit inaccurate. It dropped and has now stabilized at a lower
price. Crashing would imply that it's continuing downwards, which it isn't.

------
caseyf7
As a developer, how accurate do you think Twitter's user numbers really are?
There are a ton of fake accounts out there. Some are semi-legit (for
development), but there are millions of followers available for purchase and
Twitter has only removed a fraction compared to Facebook from my anecdotal
evidence. What do you think?

------
swingbridge
Twitter is just a sign of what's to come for a lot of new tech companies. The
street wants profit. Once you go public the whole cool startup party ends
(unless you can be a cool startup AND hit your profit numbers).

It's time to be a real business or pay the price of being an overvalued pile
of stinking financial junk.

~~~
PublicEnemy111
The downward pressure came from Twitter missing revenue expectations, not
profit.

~~~
swingbridge
Yes, but the street cares about revenue because they care about profit. If you
have high costs you can always just say you had a bad quarter but profit will
come when costs come down.

Even if Twitter fired half its people and cut costs like crazy they'd still
struggle to justify their current valuation. The street is angry at the
reveune numbers since on this current trajectory there's not really a clear
path for how the company can generate enough profit to justify its
valuation... unless their revenue skyrockets, which is looking less and less
likely evey quarter.

------
wslh
I never understood Twitter management. Just accepting small and medium sized
companies to consume their firehose and charge for that will be enough to
significantly increase their earnings. This was the Google AdWords
breakthrough.

~~~
themoonbus
I really find it hard to believe that firehose revenue would be anywhere close
to ad revenue.

~~~
wslh
Why not? there are a lot of companies looking to analyze their own market
possibilities.

BTW: Lot of downvotes instead of replies.

~~~
themoonbus
Yeah, but I'd imagine the number of companies who want to advertise something
dwarfs the number of companies doing data analysis.

It's mass market vs niche market.

------
johnpowell
I remember that CNN was all Twitter all the time a few years ago. I haven't
watched until today for Baltimore info. No mention of Twitter in the last six
hours of watching.

~~~
serve_yay
I watched the coverage all day yesterday. The police were talking about their
Twitter as the official way to stay updated, and the news anchors frequently
were talking about who tweeted what. Maybe CNN just has something against
Twitter now, who knows.

~~~
johnpowell
I'm talking more about CNN putting tweets up on the screen and discussing the
contents of the tweet. Like when a tweet about MH370 being sucked into a black
hole was discussed by a panel.

~~~
serve_yay
Yes, and I'm saying maybe someone in their company decided that Twitter is
bad, or maybe some Twitter VP ate the sandwich that person wanted to eat, or
they decided Twitter is a competitive threat, or whatever. As I said, who
knows.

~~~
dragonwriter
Or maybe the novelty wore off.

------
dataker
I see boomers yelling 'the bubble is bursting'.

------
downandout
While I understand Twitter from a technical perspective, I have never
understood why a large number of people use it. The value proposition for an
average person is effectively zero. It's great for businesses and celebrities,
but one-sided value propositions tend to not work out long term. We are now
starting to see that inevitable result play out. You can only defy gravity for
so long.

~~~
pnathan
The serious interactive users of twitter typically use it like a threaded IRC
channel, with added benefit of being able to search based upon user and
hashtags.

I've used it to good effect to watch real-time events like protests and riots.

------
jacquesm
This explains the deluge of dubious advertising at the top of twitter pages.

------
needhelpplz
this is my theory that the current economic model we have of dot com stocks is
very much flawed, grossly overvaluing future potential revenues vs. current
revenues. This argument never makes sense to me, unless you are investing in
infrastructures like oil rigs or telecom grids that have a very sure and
quantifiable return on investment, this is a mystery with a lot of dot com
companies, especially for those that fail to demonstrate ability to earn.

I think a market correction is long overdue, I believe that after this year,
capitals will be tougher to come across, companies that didn't really innovate
but instead captured markets by burning cash won't be able to sustain this
level come rainy season when capital market dries up for these firms.

