Twitter’s Q3 earnings trigger a plunge in stock

Alyssa Clementi

Twitter just released it’s less-than-impressive earnings report for Q3 2019, triggering its stock to drop almost 20 per cent in early trading today. The social media giant made an operating income of 44m this past quarter, which the company acknowledged was “lower-than-expected”, especially when compared to 2018’s $92m for the same period.

Revenue for the Q3 rose 9 per cent year-over- year, to $824m, which still fell short of investor and analyst predications. Twitter attributes this lull in performance to “revenue product issues and greater-than-expected seasonality.”

Average Monetizable Daily Active Usage (mDAU) hit 145m in Q3, a 17 per cent increase year-over-year. Total advertising revenue was $70m, an increase of 8 per cent. Twitter also made it a point to highlight its proactiveness when it came to abusive content, stating the app automatically took down 50 per cent of abusive tweets without an initial report from a user. Twitter went on to say health the app’s health is the number one priority for the final quarter of 2019.

Looking ahead to Q4, Twitter expects its total revenue to be between $940m and $1.01bn and predicts its operating income will land between $130m and $170m.

“Despite all of the effort Twitter has put in to make its platform a safer, more enjoyable place for its users, its Q3 results show it is still struggling to attract ad dollars away from Facebook and its family of applications. While social media performance data clearly shows that Instagram is the most engaging platform for brands, Twitter is still doing a good job of maintaining brand engagement on the platform,” commented Yuval Ben-Itzhak, CEO, Socialbakers.

Ben-Itzhak continued, “Above all else, Twitter is making an effort to stay competitive with new and engaging ad formats, which have led it to profit in the last two quarters. If it can continue to engage advertisers in new ways – and keep monetizing its data business – 2020 may end up being its best year yet.”

“As we saw with last quarter’s results, Twitter’s focus is again on efforts to root out bad activity on the platform, while also making it easier for users to discover new content. In July, Twitter announced a policy update to address hateful language directed at religious groups, in an effort to moderate hate speech on the platform. And more recently in October, amid pressure to rein in Trump, Twitter amended an earlier June policy that would restrict users from liking, retweeting, or sharing offensive tweets from world leaders. It’s clearly in Twitter’s best interest to improve the health of its feeds if it wants to continue to grow monetisable daily active users and be attractive to advertisers; its main source of financial fuel,” commented Anthony Macro, head of social advertising, Croud.