Twitter share price plummets as results are leaked early and fail to meet expectations

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Twitter had a disappointing first quarter, and this was made even worse by the accidental leakage of its results. 

The figures

In the first three months of 2015, Twitter experienced a 74 per cent rise in revenue to $436m (£284m), and had earnings of seven cents per share. This failed to meet analyst expectations of a $456.2m revenue.
 
Exacerbating this poor performance was the accidental early leakage of the results by financial information platform Selerity. Shares in the social media company were halted following the incident, and when trading resumed they fell by as much as 26 per cent to $38.38.

Why it's interesting 

This marks a fall from grace for Twitter in terms of shares – over the past year, they have increased by 44.5 per cent, compared to an increase of just 13.4 per cent for the S&P 500. In the past three months alone they have gone up by 39 per cent.
 
The company blamed the lower-than-expected revenue on the poor performance of its new direct response products, and expects this revenue impact to continue for the rest of the year. 

 

What Twitter said

Dick Costolo, chief executive of the company, said he was confident about the company's long-term success, despite this dip: 

While we exceeded our EBITDA target for the first quarter, revenue growth fell slightly short of our expectations due to lower-than-expected contribution from some of our newer direct response products. It is still early days for these products, and we have a strong pipeline that we believe will drive increased value for direct response advertisers in the future.
 
We remain confident in our strategy and in Twitter’s long-term opportunity, and our focus remains on creating sustainable shareholder value by executing against our three priorities: strengthening the core, reducing barriers to consumption and delivering new apps and services.

In short

The latest figures will do nothing to assuage investor fears that the company is unable to generate a revenue as powerful as its cultural influence, but the strong upward trend in share price may prove difficult to shift once the initial reaction has died down.