Twitter Inc (TWTR) Falls on Earnings Leak, GoPro Beats (GPRO)
Earnings for Twitter Inc‘s (NYSE:TWTR) Q1 were leaked about 40 minutes before the closing bell Tuesday, sending shares into a precipitous tailspin by the closing bell. Twitter fell 18.18 percent before the company could have the Nasdaq exchange suspend trading on its shares.
Results for the company’s Q1 were mixed: loss per share of -20 cents (accounting for stock-based compensation, but not strictly GAAP) was a penny better than expected, but revenues were much lower at $436 million, compared to the Zacks consensus estimate of $457 million. Twitter also guided lower for Q2 — the company now expects sales in the range of $470-485 million, though our consensus prior to the report was for $538 million in the June quarter.
Thus, not only do we expect this Zacks Rank #2 (Buy) stock to experience downward revisions from covering analysts in the near term, but the security breach that led to the leak of its quarterly earnings is at best an embarrassment. Following the leak, Twitter representatives reported that its webpage for Investor Relations is run by an outside firm, not Twitter itself.
Monthly active users (MAU) results were slightly better than expected at 302 million for the March quarter, representing a gain of 18 percent year over year and 14 million higher than a quarter ago. This is also an improvement sequentially, as Twitter’s Q4 experienced a net add of just 4 million users. Twitter attributed its sales miss on “a lower-than-expected contribution from its newer direct response products.” This is in reference to its advertising products which offer ad services to various brands.
The 18 percent hit in share price has brought its year-over-year gain to less than 2 percent. Twitter still trades up 17 percent year-to-date.
Another 21st century company — GoPro Inc (NASDAQ:GPRO) — also reported earnings this afternoon. The maker of the HERO4 helmet cam brought in earnings of 11 cents per share (accounting for stock-based compensation) on $363 million in revenues for the March quarter. This was a big beat on the top line, where sales of $345 million were expected; the company also posted a positive earnings surprise from the 8 cents per share expected.
Gross margin of 45.1 percent was also better than the 44.5 percent expected. The company cited opportunities for growth momentum overseas, particularly China, should provide strength for GoPro going forward.
GoPro is also a Zacks Rank #2 stock, though shares are down 4.5 percent in after-market trading. Perhaps this may have something to do with questions regarding GoPro’s acquisition of French virtual-reality company Kolor for an undisclosed amount.