Twitter shares fall after warning of user growth and rising costs

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Shares of Twitter Inc (NYSE: TWTR ) slumped on Thursday after reporting a rise in ad sales, though it warned of rising costs and expenses and said user growth could slow. in the coming quarters as the flow seen during the coronavirus pandemic tapers off.

The social network also said stock-based compensation for new hires would be higher than expected this year.

Twitter shares fell 8.7% to $59.30 in after-hours trading.

Twitter says it wants to pick itself up after years of stagnation, announcing bold goals in February to expand its user base, accelerate new features for users and double its revenue by 2023.

Advertising revenue for the first quarter was $899 million, up 32% from the same period a year ago and beating analyst estimates of $890 million, according to IBES data from Refinitiv. Total revenue for the quarter was $1.04 billion, up 28% year-on-year and slightly higher than estimates of $1.03 billion.

The San Francisco-based company reported 199 million daily active users, up 20% year-over-year, compared to analyst estimates of 200 million, according to data from FactSet (NYSE: FDS ).

Twitter reiterated its warning that the growth of its monetizable daily active users (mDAU), its term for daily users who can see ads, could hit “low double digits” in coming quarters, likely reaching lows in the second. trimester.

TOO SOON TO TELL

Twitter said in a letter to shareholders that it was too early to understand the full impact of the change in Apple Inc’s (NASDAQ: AAPL ) privacy policy . which began rolling out Monday, but said its integration with a new Apple ad measurement tool has increased the number of iOS devices it can target certain types of ads to by 30%.

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Facebook Inc (NASDAQ: FB ) said this week that its growth could decline “significantly” this year as Apple’s move makes it harder to target ads.

Twitter promised in February to double its annual revenue to $7.5 billion in 2023 from $3.7 billion in 2020.

The company, which last year launched disappearing tweets called “Fleets,” similar to Snapchat messages, is also testing a live audio feature called “Spaces” to compete with voice app Clubhouse.

Twitter said it expects total revenue to grow faster than expenses this year, assuming the coronavirus is a minor factor. He also sees a “modest impact” from Apple’s changes.

But he said in his outlook that stock-based compensation expenses for this year will rise to $600 million, up from his previous forecast of $525 million to $575 million, as the company ramps up hiring. The company forecast that capital expenditures will be between $900 million and $950 million for the full year.

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