cool hit counter Twitter's share price growth slows as costs rise_Intefrankly

Twitter's share price growth slows as costs rise

By David Ingram and Munsif Vengattil

By Reuters: Shares of Twitter Inc (TWTR.N) fell on Wednesday after the company said its revenue growth would slow this year, while rising costs were hurt by its efforts to fend off allegations of hate speech and election rigging through its service.

That outlook belies the second profitable quarter in the company's history, which topped Wall Street's estimates for its revenue, profit and subscribers.

Quarterly revenue was up 21 percent from a year ago, but Twitter said revenue growth for the rest of 2018 will be similar to the pace of revenue growth in 2016, when annual revenue grew 14 percent.

Twitter said its average daily active users grew 10 percent year-over-year, down from the 12 to 14 percent it has maintained in recent quarters, a change that "spooked investors," said Wedbush Securities analyst Michael Padgett.

International sales accounted for 48% of revenue, up 53% year-over-year, compared to 2% growth in the U.S. It added 5 million new foreign subscribers in the quarter, five times as many as in the US.

Adding users on the far side of the world is of little value to Twitter," said Ross Gerber, chief executive of investment firm Gerber Kawasaki. "

The social media industry has faced pressure from lawmakers around the world including accusations of fostering political debate, allowing abusive speech and failing to protect personal data. And stricter regulation could mean higher costs.

Facebook Inc (FB.O) has been under particular scrutiny on this front, with its founder and chief executive Mark Zuckerberg sitting in Congress for two days this month to discuss how to handle inappropriate situations where its users' data is shared with political consulting firms.

Twitter said it expects to increase its workforce by 10 to 15 percent in 2018 to make discussions on the service more equitable, increase ad sales and meet other priorities.

According to Thomson Reuters, Twitter's stock is trading at 42 times expected earnings over the next 12 months, about 20.5 times that of Facebook.

Twitter reported net income of $61 million, or 8 cents per share, in the first quarter, compared with $61.6 million, or 9 cents per share, a year earlier. Excluding items, the company earned 16 cents per share, above the average analyst valuation of 12 cents per share.

Twitter tries to adapt its core product in an attempt to broaden its appeal. Last year, it doubled the maximum length of tweets to 280 characters in most languages and added customizable anti-harassment tools, such as blocking tweets with certain words.

The company has also developed live streaming and live events to get people to spend more time on the service and sell video ads to marketers. Video accounted for more than half of ad revenue in the quarter.

(Reported by David Ingram in San Francisco and Munsif Vengattil in Bangalore; (Edited by Peter Henderson and Scott Malone)

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