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Twitter Stock Plunges on Weak Forecast

Major social network, Twitter, has post a 24% YoY on Q4 revenue to US$909 million, but its stock plummeted as it forecasted a weak Q1.

Twitter also announced it will stop reporting monthly active users in favour of counting “monetizable” daily active users.

Q4 was the fifth quarter in a row that the social network reported a profit, with revenue of US$909 million and 31 cents earnings per share, however, its shares tumbled approximately 8% in premarket trading as the social network forecasts a less successful 2019.

2018 revenues notched US$3 billion, up from US$2.4 billion in fiscal year 2017, profit hit US$1.2 billion in fiscal year 2018.

Twitter is anticipating total revenue for Q1 2019 to be between US$715 million and US$775 million, with an operating income of US$5 million to US$35 million — far below the $74.9 million income, it posted during the same period last year.

It disclosed within its earnings report, total year operating expenses are forecast to increase 20% YoY as it plans to invest more in improving safety and spam elimination.

“We enter this year confident that we will continue to deliver strong performance by focusing on making Twitter a healthier and more conversational service,” said Twitter CEO Jack Dorsey.

One of the major issues on the platform is online abuse from “bad actors”. Twitter has boasted a 16% decrease in reports of abuse and promised to take a more “proactive approach” in curtailing future incidences.

Twitter also announced that unlike other social media platforms it will no longer report on monthly active users (MAU) and will instead focus on “average monetizable daily active users,” or “mDAU,” i.e. users it can monetize or show ads to on a daily basis.

This switch in reporting users enables Twitter to put a positive spin on its performance.

“Our mDAU are not comparable to current disclosures from other companies, many of whom share a more expansive metric that includes people who are not seeing ad,” Twitter says.

The social network’s MAU has stalled/declined as the social network purges fake and spam accounts, but its daily active user numbers continue to grow,

For Q4, Twitter reported 126 million mDAU, up from 115 million the same period last year, and 124 million in Q3Y18.

The average MAU for the fourth quarter fell 5 million to 321 million, down from 330 million in the year-earlier period.

In announcing the decision to only disclose mDAUs in future reports, Twitter said, “We want to align our external stakeholders around one metric that reflects our goal of delivering value to people on Twitter every day and monetizing that usage.”

However, it was quick to state that the switch will not impact its relationship with advertisers or affect the information advertisers receive before deciding to advertise on the social network.

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