Last week’s markets were, for the most part, quite bearish. Major U.S. stock indexes were down around 6% across the board in the U.S. over the course of the week, with anxieties surrounding COVID as well as the upcoming election all playing a big role in making investors nervous.
Some of the biggest losers before the markets closed last week were the big tech companies, including Google, Amazon, Facebook, and more, especially since regulatory scrutiny surrounding these companies in continuing to grow. Twitter (NYSE: TWTR) ended up tumbling more than 21% on Friday after the company reported its third quarter financial results, which weren’t that bad overall.
While the results were a slight disappointment, they weren’t as bad as you would expect considering how much the stock tumbled. Twitter reported that its total daily active users increased by around one million to 187 million this quarter, which is significantly less than the 195 million expected by analysts. On the other hand, Twitter reported revenue of $936 million, which was quite a bit higher than the $777 million Wall Street was expecting. Ad revenue, which represents a large chunk of the company’s total cash flow, is up 15% from last year. That’s despite the company saying it will stop all political ads, as well.
“The good news is we did have a big surge in usage in March. The great news about that is we’re retaining that group of people better than we have historical groups because of all the product work we’ve done. So, the way it’s flowed through our monetizable daily active usage, we ended up growing our DAU by a million sequentially this quarter, but 42 million year over year,” said Twitter CFO Ned Segal in an interview with CNBC.
Twitters Q3 results came just 24 hours following the second major big tech hearing in Capitol Hill. In particular, Twitter CEO Jack Dorsey was present along with Mark Zuckerberg and Sundar Pichai before the Senate Commerce Committee on the topic of content censorship and moderation.
All in all, Twitter’s financial results are pretty decent for the quarter, especially in contrast to some other companies that have seen their revenue figures crash thanks to the coronavirus. However, even the slightest disappointment seems to be enough to send a stock tumbling in the current market climate.
Shares of Twitter ended up plummeting around 21% on Friday, making it one of the worst-performing stocks that day. Before this, Twitter had been doing pretty well for itself this past year, having been up around 60% so far in 2020. Traders should expect this kind of volatility to continue going into this week, especially since the Federal elections are looming right around the corner.
Twitter Company Profile
Twitter is an open distribution platform for and a conversational platform around short-form text (a maximum of 140 characters), image, and video content. Its users can create different social networks based on their interests, thereby creating an interest graph. Many prominent celebrities and public figures have Twitter accounts. Twitter generates revenue from advertising (90%) and licensing the user data that it compiles (10%). – Warrior Trading News
