Twitter shares slide further on earnings disappointment

Twitter shares slid further on Wednesday morning to below $40 as investors digested the news of its poor results for the first quarter.

The stock fell as much as 26 per cent on Tuesday - wiping $6.1bn off its market capitalisation - after Nasdaq accidentally published the messaging platform's financial results early, showing it missed revenue expectations and lowered its guidance.

The company sold shares in November 2013 at $26 apiece and shares reached a high of $74.73 in December of that year as investors bet the company would reach the height of rivals like Facebook.

However, a string of disappointing results has sent the shares falling by more than two-fifths last year.

Twitter fell victim to the speed of its own distribution this week when Selerity, an independent data gathering company founded and backed by ex-Thomson Reuters executives, found the results on Twitter's investor relations website and tweeted out the figures with the hashtag 'BREAKING'.

The release had been posted on Twitter's investor relations site by Nasdaq's Shareholder.com service.

The error could prove damaging for Nasdaq and marks the second high-profile earnings leak for Shareholder.com in a little over six months. In October, JPMorgan's quarterly results were released hours ahead of schedule.

Twitter shares were trading barely 1 per cent lower before the leak on Tuesday and then fell about 6 per cent on the news before trading was halted. The shares resumed trading and plunged as much as 26 per cent before closing down 18 per cent at $42.27.

On Wednesday morning, it was down a further 5 per cent at $40.25 after hitting a low of $39.75.

Nasdaq issued a statement about the details behind the mistaken early release which had taken investors by surprise. The exchange said that an "operational issue" had occured at 3:07pm EDT, when its Shareholder.com investor information arm "inadvertently posted Twitter's earnings release prematurely on its investor relations website."

"The posting was caused by an operational issue that exposed the release on Twitter's IR website for approximately 45 seconds. During those seconds the site was scraped by a third party that publicly disseminated the earnings information."

Twitter said it had been informed about the leak by Selerity, which in 2011 forced Microsoft to release its results early after it found the numbers on the company's website more than an hour before they were due to be released.

Dick Costolo, Twitter chief executive, said revenue had missed expectations because some of the newer direct response adverts it introduced were not taking off as expected.

"We remain confident in our strategy and in Twitter's long-term opportunity," he said.

Twitter disappointed investors who have seen the shares rise 25 per cent since the last earnings report on hopes about the company's ability to sell advertisements.

But revenue for the quarter was $436m, below the consensus forecast for $457m. Sales were 74 per cent higher year-on-year, or 80 per cent on a constant currency basis.

Twitter also lowered its guidance for the full year, making cautious noises about the new ad format and user growth.

It forecast revenue of $2.17bn to $2.27bn and adjusted earnings before interest, tax, depreciation and amortisation (ebitda) of $510m to $535m - below prior predictions for revenue of between $2.3bn and $2.35bn and adjusted ebitda of $550m to $575m.

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Non-GAAP earnings were 7 cents per share, beating expectations of 4 cents. The net loss, on a GAAP basis, widened to $162m from $132m the year before.

Anthony Noto, Twitter's chief financial officer, said changes to the ads had resulted in lower click-through rates in the short term, but would hopefully lead to higher return on investment, and higher prices, in the longer term.

Twitter tried to address the problems with the new ad format by announcing a partnership with Google's DoubleClick platform, an industry leader, to improve measurement and sales attribution for direct response advertisers. The deal will give Twitter access to Google's huge advertiser base, potentially boosting sales.

This is Twitter's second partnership with Google this year, after the search engine agreed to include tweets in its results, to help Twitter reach new users.

The company also announced it was acquiring Tell Apart, a marketing technology company that helps ecommerce companies target consumers, for an undisclosed sum.

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