Twitter shares dive after flagging weaker revenue, higher costs

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Compared to analysts' expectation of $764.9 Mn, Twitter predicts its first quarter revenue for 2019 to fall within the range of $715 Mn to $775 Mn. The company's shares increased 35 per cent in the past 12 months through Wednesday's close, as investors grew optimistic about Twitter's ability to attract more advertisers to the service, which has benefited from new formats like video. Analysts had expected 25 cents, on average, according to IBES data from Refinitiv.

It disclosed within its earnings report, total year operating expenses are forecast to increase 20% YoY as it plans to invest more in improving safety and spam elimination. Analysts are expecting about $765m, on average.

One way Twitter will deal with this steady decline in monthly active users is to simply stop reporting them. Twitter said the decrease was the result of a number of factors including changes that reduced the number of e-mail notifications sent, decisions made to prioritize the health of the service, changes made to comply with the General Data Protection Regulation (GDPR) in Europe and not moving to paid SMS carrier relationships in certain markets. Thibault continued: "Higher operating expenses, on the other hand, are a bigger problem, as I anticipate Twitter's margins and profits to shrink considerably in 2019".

It expects capital expenditures to be between $550m and $600m, well above analysts' average estimate of $415m for 2019.

Twitter said its number of average daily active users exposed to Twitter ads rose to 126 million in Q4 from 115 million in Q4 2017 and 124 million in the Q3 2018.

Monthly active users, meanwhile, have fallen significantly - from a high of 336 at the start of the financial year to 321 million now. If an investor finds it too risky to bet on Twitter now, the ETF route can be taken as the basket approach lowers company-specific concentration risks.

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Fourth-quarter sales increased 24 percent to $908.8 million, beating analysts' average estimate of $867.1 million.

An Indian man poses for a photograph using Twitter on his cellphone.

Overall revenue rose to $909 million in the quarter, beating the estimate of $868.2 million.

Shares skidded 9.8 percent to close at 30.80 US dollars following Twitter's fourth quarter update, which showed a consistent profit trend despite a shrinking number of users.

With ad revenues making up the bulk of the total, the social network's overall revenues for the Q4 clocked in at $909m - a 24% increase on the same time past year. Since the company has the tendency to share a metric that is more expansive and includes people who are not seeing ads, the representative said its mDAUs are not comparable to disclosures from other organizations. $791 million of that figure comes from advertising revenue, split $425 million in the United States compared to $366 internationally - while data licensing making up the other $117 million.

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