Twitter Inc share price soars, posts Q2 growth in user base and revenue, yet to make profit

Twitter Inc shares gained as much as 35% in after-hours trading, after the company revealed significant growth in both active user base and revenue. A sizable net loss was reported, however, raising some concerns for the San Francisco-based company.

The report on Q2 earnings, released late on Tuesday, logged revenue of $312 million, up 124% on an annual basis, while also posting a net loss of $145 million, 237% more than a year ago. Expenses do include, however, a $158 million stock price-based employee compensation, without which net income would be in black for some $15 million profit, compared to a $16 million net loss for last year.

“Our strong financial and operating results for the second quarter show the continued momentum of our business,” said Dick Costolo, CEO of Twitter. “We remain focused on driving increased user growth and engagement, and by developing new product experiences, like the one we built around the World Cup, we believe we can extend Twitters appeal to an even broader audience.”

Average monthly active users were 271 million, 24% more than a year ago, with mobile users representing 78% of the total. Mr Costolo said during a conference call that the audience of Twitter is “two to three times that of just our monthly active users.” He said there were 4.4 billion impressions of tweets about the Germany-Brazil World Cup game on Twitter, and a further 2 billion off the platform.

Both the Brazil-Germany game and the final set new traffic records for Twitter, though some analysts expressed concern.

“The expectations going in had become quite low,” Sterne Agee analyst Arvind Bhatia said for Reuters. “You have to look maybe at what happens in the next quarter and see if they can continue to have upside on the user growth.”

The company projected a full-year revenue in the range of $1.310 billion to $1.330 billion, while further stock price-based compensation for employees were projected to continue growing to be in the range of $640 million to $690 million, excluding potential acquisitions impact on prices.

Twitter shares had lost about 38% since the start of 2014 to Tuesday, while social-media rival Facebook was up more than 27% so far this year, with Q2 results that beat expectations.

“Twitter hasnt earned its keep yet, and its mostly because of how different it is and how contextual it is,” said Nathaniel Perez, global head of social at SapientNitro, a digital-ad agency in Boston, said for the Wall Street Journal. “I think it will get there.”

Twitter Inc shares soared to as much as $51.20 in after-hours trade, adding as much as $7 billion to its value. Shares closed at $38.59 in New York earlier, up 1.74%, for a market capitalization of $22.77 billion. According to the Financial Times, 32 analysts offering 12 month price targets for Twitter Inc had a median target of $43.00, with a high estimate of $60.00 and a low estimate of $25.00.