Twitter share price soars despite financial loss

YOU’D think that if a company lost $154 million, investors would abandon ship. But not in Twitter’s case which saw its share price go absolutely gangbusters.

FILE - This Friday, Oct. 18, 2013, file photo shows a Twitter app on an iPhone screen, in New York. Twitter reports quarterly financial results on Tuesday, July 29, 2014. (AP Photo/Richard Drew, File)

IN THE three months to June, Twitter lost $A154 million. But in the hours following its results announcement, the little blue bird’s share price soared 30 per cent.

Seems weird that investors and banking types would jump onto a stock who’s just posted a huge loss but the real numbers the moneyed types were looking at were its revenue and user base figures.

Twitter’s revenue, the money it makes through sales and other operations, were more than double the same period last year. It raked in $332.7 million in the second quarter this year, compared to $148.4 million last year.

Twitter also grew its user base to 271 million users, surpassing analysts’ expectation of 266 million users. The surge in its user base is alleviating concerns, at least for now, that it doesn’t hold appeal for a broad swath of people. Its larger rival, Facebook, also posted strong results last week and its stock is trading near a record high.

Twitter’s executive team at the New York Stock Exchange in November on the day of the company’s IPO.

Twitter’s stock jumped 30 per cent to $53.29 in extended trading Tuesday. Its share price is now double that of its initial public offering price of $27.7 in November 2013.

Analysts and investors often look at factors beyond the profit/loss line when it comes to whether it would back a company. Most often, they’re looking at a company’s future potential for big returns.

Mobile advertising revenue was $224 million, or 81 per cent of the quarter’s total ad revenue. In the first quarter, mobile ad revenue amounted to about 80 per cent of total ad revenue. Mobile ad revenues are important to analysts as consumers increasingly spend more time on mobile platforms.

“Our strong financial and operating results for the second quarter show the continued momentum of our business,” said CEO Dick Costolo in a statement. “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 Twitter’s appeal to an even broader audience.”

Originally published as Twitter share price soars despite financial loss