Twitter is having an incredibly rough day in the market today, and for good reason. The company reported earnings for the most recent quarter yesterday after the closing bell, and as expected, the report was overwhelmingly negative. Today, we'll talk about what we saw from the report, how investors reacted to the news, what we can expect to see from Twitter moving forward, and how binary options traders can take advantage of the trends.
What We Saw From Twitter's Earnings
As mentioned above, Twitter reported its earnings for the most recent quarter yesterday. Unfortunately, the earnings were overwhelmingly negative. Here's what we saw…
Earnings – Earnings is the only area of the report where Twitter did not disappoint. While analysts expected that the company would generate earnings in the amount of $0.10 per share, the company actually reported a strong earnings surprise at $0.15 per share.
Revenue – While earnings were overwhelmingly positive, the same couldn't be said for revenue. During the quarter, analysts expected that Twitter would report revenue in the amount of $607.84 million. However, during the first quarter, the company only generated revenue in the amount of $595 million, falling well short of expectations.
User Growth – While earnings and revenue are important, during this quarter, investors were more important in growth in monthly active users. During the quarter, the company reported that monthly active users came in at 310 million. This proves a painful growth of only 3% year over year, and an incredibly poor gain since the previous quarter when monthly active users came in at 305 million.
Guidance – Finally, Twitter didn't only disappoint investors for the first quarter, it set expectations to disappoint in the second quarter as well. During the second quarter, the company is only expecting to generate between $590 million and $610 million in revenue. This is a big miss from Wall Street expectations of $677.57 million.
How The Market Reacted To The News
As binary options traders, we know that the news moves the market. Any time there is positive news released with regard to a publicly traded company, we can expect to see gains. However, the news released by Twitter was overwhelmingly negative. So naturally, we're seeing declines on the stock. Currently (2:14), Twitter is trading at $14.98 per share after a loss of $2.77 per share or 15.58% thus far today.
What We Can Expect To See Moving Forward
Moving forward, I'm not expecting to see much by way of positivity out of Twitter. Unfortunately, the company can't seem to get user growth in order. While they have focused heavily on advertisers, investors know that until users start to grow again, chances are that the company will reach a flat point in revenue, and it seems as though that point is being reached now. As a result, I'm expecting to see further declines on the stock in both the short and long term outlooks.
How Binary Options Traders Can Take Advantage Of The Trends
As binary options traders, our job is relatively simple. We need to predict market movements and make trades to capitalize off of those movements. In the case of Twitter, all signs seem to be pointing toward further downtrends. So, binary options traders should watch the stock closely. As the value of the stock nears resistance, it's time to start purchasing put options in order to take advantage of the resulting downtrends.
What Do You Think?
Where do you think Twitter is headed moving forward and why? Let us know your opinion in the comments below!
[Image Courtesy of Pixabay]