Twitter Shares Tumble
On Tuesday, Twitter Inc. (TWTR, -18.18%) reported first quarter earnings which failed to impress. Revenue rose less than expected and the social media company also provided downbeat sales guidance for the second quarter and for the year. In late trading, the shares of Twitter dropped 17 percent to trade at $42.93. While the company was only expected to report earnings after the market closed, their earnings per share results were tweeted earlier by the data-mining platform Selerity. According to Dick Costolo, Chief Executive at Twitter, revenue growth declined and was lower than expectations as a result of poor contribution from some of Twitter’s newer products such as video functionality, instant timelines, the ‘while you away feature’ and group direct messaging. For the March quarter, Twitter reported that the number of users who logged in at least once a month rose to 302 million. This was an 18 percent increase compared to the same period a year ago. Also, the company reported a loss of 25 cents a share or $162 million compared with a loss of 23 cents or $132 million a year earlier. Meanwhile, Twitter’s earnings per share rose to 7 cents a share from zero cents a share in same period a year ago. While analysts were expecting revenue of $457 million, Twitter reported earnings of $436 million, an increase of 74%. Advertising revenue also grew to $388 million, up 72 percent. Mobile ad revenue made up 89 percent of the advertising revenue while international revenue more than doubled to $147 million.
On Tuesday, U.S. stocks ended the volatile trading session higher. Both the Nasdaq Composite and the S&P 500 index closed near the record levels reached last week. These gains were capped however as a result of weaker than expected economic data. At the close of trading, the Nasdaq Composite index (COMP) dropped 0.1%, or 4.82 points, at 5,055.42. The biggest gainer on the tech heavy Nasdaq was Microsoft which rose 2.13 percent or 1.03 to 49.06. On the upside was the S&P 500 index (SPX) which rose 0.3%, or 5.84 points, to 2,114.76. The top performer on the SPX was Merck (MRK), which gained 3.22 or 5.64% to 60.32. This came after the pharmaceutical company's study on Januvia, a diabetes drug, showed promising results. Also on the upside was the Dow Jones Industrial Average (DJIA) which dropped 0.4%, or 72.17 points, at 18,110.14. During the trading session, the blue chip index dropped by as much as 120 points and the top performer on the Dow was also Merck. Meanwhile, the shares of IBM (N:IBM) rose 1.9% to trade at $173.92 a share which also gave the Dow a boost. This came after IBM increased its quarterly dividend by 18% which marked the biggest increase in 5 years.
On Tuesday, the U.S. dollar (USD) traded lower. This came after data showed that the consumer confidence in the U.S. had declined in April which prompted concerns regarding the strength of the economy. According to the Conference Board, their consumer confidence index declined from 101.4 in March to 95.2 in April. This missed expectations of 102.5. Added to this, expectations of the inflation rate were the lowest since February 2007. The report also stated that the decline in confidence was as a result of the recent poor performance in the labor market as well as the uncertainty regarding the short term outlook. In a separate report released on Tuesday, data showed that home prices in the U.S. increased in February from a year earlier. In trading, the EUR/USD traded at 1.0949, up 0.52% while the GBP/USD was also up 0.47% and trading at 1.5310. This came after the Office of National Statistics reported that the GDP (gross domestic product) in the U.K. expanded in the 3 months to March by 0.3%. Also, on a year-over-year basis the economy in the U.K grew 2.4 percent which missed expectations for a 2.6% growth. Meanwhile, against the yen, the USD traded lower with USD/JPY down 0.13% to 118.88. The USD/CHF was steady at 0.9547 while the U.S. dollar index was at 96.39, down 0.53%.
On Wednesday, in early Asian trading, crude oil prices eased. WTI crude oil for delivery in June traded at $56.88 a barrel, down 0.32%, on the NYMEX. In their weekly report, the API (American Petroleum Institute) stated that crude oil stocks last week increased by 4.2 million barrels. Declining were distillate supplies which dropped by 746,000 barrels while gasoline stocks also dropped by 408,000 barrels. On Tuesday, Brent crude oil for delivery in June traded at $64.62 a barrel, down 0.32%, on the Intercontinental Exchange (ICE).