EARNINGS
Twitter stock falls
on slow user growth

Twitter’s third-quarter revenue outpaced expectations, but investors concerned about user growth and holiday-quarter sales clipped the company’s stock price late Monday.

The San Francisco-based company has been trying to increase its user base amid concerns that it doesn’t hold mass appeal in the way that Facebook does. Its user base grew 23 percent, to 284 million monthly active users, which Forrester Research analyst Nate Elliot said was “better than nothing.”

“It’s hard to be ecstatic about those numbers when it’s still a user base under 300 million people,” Elliot said. “It’s a social property less than a quarter size of Facebook.”

To appeal to more people, Twitter has tried to make it easier for people to sign up for and use its service, and it got a boost this summer from promoting itself as a place to follow the World Cup. In July, its stock grew by 30 percent on the day it reported better-than-expected results and a 24 percent increase in its monthly user base.

This time, though, the growth wasn’t enough, which, coupled with a lackluster revenue guidance for the current period, was enough to send the company’s stock price more than 8 percent lower in extended trading.

Twitter posted a loss of $175 million in the latest quarter. That compares with a loss of $64.6 million a year earlier when it was still a private company.

Revenue more than doubled, to $361 million, beating the $351.5 million expected by analysts, according to FactSet.

— Associated Press

BANKING
Euro zone lagging in applying capital rules

Europe’s banking health check has shown that countries and lenders are implementing global capital rules at vastly different speeds — and that 36 banks would have failed if new capital rules were fully applied.

The euro zone is lagging behind countries outside the bloc in implementing the Basel III capital rules that are due to come into full force in 2019, potentially adding another challenge for the European Central Bank when it takes over supervision of euro-zone lenders next month.

“On a fully loaded basis, many banks have only passed the stress test by very thin margins or could be challenged in meeting the requirements, so they will be expected to do more,” said Carola Schuler, managing director for banking at ratings agency Moody’s.

Twenty-five European banks failed a health check of whether they could withstand a recession, and an additional 11 would have failed if the full Basel III rules had been applied, according to data from the European Banking Authority released Sunday.

Europe had gained credibility, said Karen Petrou, co-founder of Federal Financial Analytics in Washington. But a similar exercise by the U.S. Federal Reserve was still tougher, in part because it requires banks to fully load Basel. “It’s still an easier and different one than the Fed stress test in many, many respects,” she said.

Banks failed if they had common equity of 5.5 percent or less under a 2014-2016 recession scenario. But for the first time, “fully loaded” Basel III ratios — applying all the new global rules — were released across Europe’s top 130 banks for analysts and investors to compare their capital strength.

— Reuters

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