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| Twitter's shares plunge as honesty fails to pay off | Twitter's shares plunge as honesty fails to pay off |
| (about 4 hours later) | |
| Twitter's openness about the difficulty it is having attracting new users has failed to pay off with investors. | Twitter's openness about the difficulty it is having attracting new users has failed to pay off with investors. |
| In shareholders' first chance to react to Tuesday night's results, the stock plunged more than 13% to $31.58, wiping an estimated $3bn off the microblogging firm's value. | |
| The drop came despite Twitter reporting better-than-expected revenues and earnings for the second quarter. | The drop came despite Twitter reporting better-than-expected revenues and earnings for the second quarter. |
| Analysts said the firm's honesty over its problems had made investors wary. | Analysts said the firm's honesty over its problems had made investors wary. |
| "There's not going to be a a material reversal in trends anytime soon. They were extremely candid about that. That's why the stock is down," MCH analyst James Cakmak told the BBC. | "There's not going to be a a material reversal in trends anytime soon. They were extremely candid about that. That's why the stock is down," MCH analyst James Cakmak told the BBC. |
| Despite the negative investor reaction, Mr Cakmak said the firm's openness was "evidence of a focus" that was not there previously, which he said provided "comfort" over its future direction. | Despite the negative investor reaction, Mr Cakmak said the firm's openness was "evidence of a focus" that was not there previously, which he said provided "comfort" over its future direction. |
| But in general, Wall Street analysts reacted negatively, with an estimated 18 brokerages cutting their estimates of the shares' valuation to as low as $30. | But in general, Wall Street analysts reacted negatively, with an estimated 18 brokerages cutting their estimates of the shares' valuation to as low as $30. |
| 'Radical shift' | 'Radical shift' |
| That is significantly below the $38.80 price at which the shares debuted on the US stock market in 2013. | That is significantly below the $38.80 price at which the shares debuted on the US stock market in 2013. |
| Investors' main concern remains user growth, with active users rising to 316 million in the three months to June, just a slight increase on the 308 million in the first quarter. | Investors' main concern remains user growth, with active users rising to 316 million in the three months to June, just a slight increase on the 308 million in the first quarter. |
| While chief financial officer Anthony Noto acknowledged the problem - saying people were still not clear why they should use Twitter, and that it was still too difficult for people to use - analysts are still not convinced the firm will be able to fix its problems. | While chief financial officer Anthony Noto acknowledged the problem - saying people were still not clear why they should use Twitter, and that it was still too difficult for people to use - analysts are still not convinced the firm will be able to fix its problems. |
| "In essence, it must go from being a one-product company to an ecosystem and this will require a radical shift in strategy from where the company is today," said Edison Investment Research analyst Richard Windsor. | "In essence, it must go from being a one-product company to an ecosystem and this will require a radical shift in strategy from where the company is today," said Edison Investment Research analyst Richard Windsor. |
| And RBC analyst Mark Mahaney said improvements in revenues would not be enough to help it grow in the long term. | And RBC analyst Mark Mahaney said improvements in revenues would not be enough to help it grow in the long term. |
| "That's why monthly average user growth matters. That's why user and usage metrics matter," he said. | "That's why monthly average user growth matters. That's why user and usage metrics matter," he said. |
| The other fear for investors is that the firm has still failed to appoint a permanent new chief executive after previous boss Dick Costolo stepped down. | The other fear for investors is that the firm has still failed to appoint a permanent new chief executive after previous boss Dick Costolo stepped down. |
| Co-founder Jack Dorsey started as interim chief executive at the start of this month, but Mr Cakmak warned it made the firm's long-term direction uncertain. | Co-founder Jack Dorsey started as interim chief executive at the start of this month, but Mr Cakmak warned it made the firm's long-term direction uncertain. |
| "What's the new chief executive's game plan? We don't know," he said. | "What's the new chief executive's game plan? We don't know," he said. |