The fall in Twitter’s share price: what are the analysts thinking?
After the dramatic 18% fall in Facebook shares two days ago, yesterday it was Twitter’s turn: after announcing its quarterly results, its share price plummeted by 21% and continues to drop in after-hours trading.
Which is strange for a company that reported a record profit for the third consecutive quarter, $134 million, equivalent to 13 cents a share, or 17 cents after adjustments, compared to a consensus estimate by analysts of 16 cents. Revenue rose 24% to $710.5 million, $2 million above the estimates. So far so good, right? What seems to have given the markets the jitters is that it shed one million users, leaving it with 355 million, the result of a thorough clean-out of false profiles, bots and trolls, but that analysts chose to interpret as indicating a slowdown in growth and punished accordingly.
Where is the sense in punishing Twitter for a cleanup that will make it a better company? After all, putting quality over quantity is a move in the right direction, an indication that it has finally decided to address the real problems restricting its growth, and has invested in creating a healthier network that will provide sustainable, solid growth. The numbers are impressive: after suspending more than a million accounts a day throughout May and June, overall, it ended up down just one million on the…
