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posted by cmn32480 on Thursday October 29 2015, @09:09AM   Printer-friendly
from the 140-characters-should-be-enough-for-anybody dept.

Twitter reported a rise in revenue for the three months to September but the pace of growth in active users was the slowest since it joined the stock market in 2013.

Twitter had 320 million average active monthly users, up from 316 million the previous quarter, below investor hopes.

The social networking site reported revenues of $569m, up 58% from $361m during the same period last year.

The company's shares fell 11% after the results announcement.

Revenues up, active users up, shares down.


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  • (Score: 2) by Non Sequor on Thursday October 29 2015, @06:58PM

    by Non Sequor (1005) on Thursday October 29 2015, @06:58PM (#256170) Journal

    I'm not really an active investor but some of this stuff tangentially relates to my work.

    There are a lot of ways to look at how much a company is worth. The easiest one to talk about is price to earnings ratio. It's not really a rigorous valuation model, but it's fairly easy to relate it to more complex models. If everyone thinks earnings for a company are going to grow faster than it's peers, they'll value it at a higher P/E than its peers. Growth slower than is priced in already gives people second thoughts.

    Twitter's P/E is negative but it's purely an investment in something that may be worth a lot if keeps growing it's user base and if it can get revenue proportional to that user base. So if you're looking at social media companies (and also services like Netflix and Amazon), you're thinking about the price in terms of what (relatively) more mature companies are able to generate in terms of revenue per user, how many users they have now, and how much more you think they can grow. Maybe after that you hit the whole thing with a few more fudge factors.

    The key thing is, if Twitter is looking like it's user base has peaked, then unless they've started to firm up those prospects of earning $x per user, you might want to back away from it.

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