Social-media service Twitter saw its shares fly skyward, jumping as high as 31 percent in after-hours trading after it reported much better earnings and continued user growth. The shares closed on the NYSE up 66 cents for the day, or about 1.7 percent, at $38.59 a share. Within less than two hours of post-market trading, however, the shares had hit as high as $49.99, a jump of more than $11, or 29.5 percent, just since the market close.
The big rise was fueled by Twitter’s better-than-expected earnings, up more than double for the quarter, and signs that its efforts to attract and keep new users were paying off. Revenues for Q2 hit $312.2M, way up from a year ago’s $139.3M, and also well above its own guidance of $270M to $280M. The company remains unprofitable, however, with losses widening to $144.6 million, up from $42.2 million the previous year, though that included costs such as stock-based compensation. Minus those expenses, the company logged a profit of 2 cents a share, way up from last year’s loss of 12 cents a share.
That said, the real number investors focused on was its number of users. The company has been criticized in the past for a product that, for all its apparent 140-character simplicity, uses a complicated and arcane argot that scares away some potential users and befuddles many others who sign up for the service and soon become confused and walk away.
As a result, the company has made user recruitment and retention a key focus the past six months, and it appeared to be paying off this quarter. Over the past three months, Twitter said, it added about 16 million “active” users, i.e., those who log in at least once a month. That gives it 271 million users, and was also higher than most analysts had projected for the quarter.
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