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Twitter shares jump on user and revenue growth, although it’s still not turning a profit

Twitter quieted some doubters on Tuesday, reporting a strong quarter, showing that -- in the short-term, at least -- the firm has managed to fight off doubts that it would be able to make money following its decision to go public last year.

Company shares jumped as much as 30 percent over its closing price of $38.59 after Twitter reported that its second-quarter revenue had nearly doubled to $312.2 million, from $139.3 million in the same period last year.

The company is still not turning a profit, reporting a loss of $144.6 million, or 24 cents per share. But investors were cheered by the fact that the company is making more money off each individual user -- an estimated $1.60 per every thousand views of the Twitter timeline, or main newsfeed where it shows advertisements to users.

The quarterly spike in revenue seemed to quell some concerns about the company's long-term business plan. In April, shares fell nearly 11 percent after the company reported that its monthly active users had increased just 6 percent -- to 255 million users -- after stagnating over the past several quarters. Twitter reported a similar level of growth for this quarter, just over 6 percent to 271 million users.

Twitter definitely got a boost this quarter from world events such as the World Cup, for which it created a number of new features such as push notifications for scores as a ploy to keep users checking their feeds throughout the day.

In a statement, Twitter chief executive Dick Costolo said that the firm will continue improving its ad products and making the network appeal to a broad base of users.

"[By] developing new product experiences, like the one we built around the World Cup, we believe we can extend Twitter’s appeal to an even broader audience,” Costolo said.

Analysts expect that Twitter will be able to continue its advertising revenue growth, as the firm has invested heavily in that part of the business over the past few months. And Twitter, with its bite-size messages, also appears to be well-positioned to support itself through mobile advertising, which generally produces less revenue than ads on desktops. Despite this, more than 80 percent of Twitter's ad revenue came from mobile devices; Facebook, which has been highly praised for its mobile ad strategy, makes 59 percent of its revenue from mobile devices. Twitter currently accounts for about 2.4 percent of the total mobile ad market, according to the ad analysis firm eMarketer.

Hayley Tsukayama covers consumer technology for The Washington Post.
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Last Update: 1:41 PM 02/10/2016(DJIA&NASDAQ)



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