Shares closed in New York down 18 percent.
It has been a rough week for Twitter on Wall Street. The social media company saw its share prices plunge after it reported first-quarter revenue below Wall Street estimates. Then, to make matters worse, its quarterly results leaked before the market closed, causing trading in its shares to cease entirely, USA Today reports.
Twitter’s share prices fell roughly 20 percent in regular trading, and closed in New York at $42.27, down 18 percent. Shares reportedly took another dive in after-hours trading.
The leaked earnings figures are embarrassing, but the revenue slowdown is much more concerning for investors.
Twitter said in a Tuesday statement, according to Bloomberg, that revenues will be $470-$485 million in the second quarter, falling short of analysts’ average projection for $538.1 million. Of additional concern, Twitter downgraded its full-year revenue guidance to $2.17 billion to $2.27 billion, from the previous range of $2.3 billion to $2.35 billion.
“It calls into question why they didn’t see this coming,” Victor Anthony, an analyst at Axiom Capital Management, told Bloomberg. “I don’t think anyone ever questioned their ability to generate revenues.
With leaks and falling revenue, Twitter CEO Dick Costolo’s credibility is at stake. He had assured investors that new features and services, not to mention a management overhaul, were starting to pay off. But even with these new products and services, Twitter’s growth is flagging. The number of Twitter users rose 18 percent in the latest quarter, compared with 20 percent in the prior period, Bloomberg reports.
Decelerating growth and collapsing revenue is not a recipe for success. Perhaps Twitter has reached the limit of its market.