Twitter Worst-Performing S&P 500 Stock in Q3

By Douglas A. McIntyre Updated Jan 11, 5:08PM EST · Published Sep 29, 8:35AM EDT

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Twitter Worst-Performing S&P 500 Stock in Q3 — © pixabay.com

As the third quarter drew to a close, Twitter Inc. (NYSE: TWTR) posted the worst performance of stocks that are part of the S&P 500 index. Its shares fell 35% for the period.

Twitter has been hurt because it is one of the largest social media companies. Along with Facebook, it has suffered accusations of being a conduit of hate speech, fake accounts used to influence election results and perhaps sex trafficking. This has led to a set of aggressive government investigations, which in turn may trigger regulation. Regulation could cause Twitter members to think their free speech rights will be compromised. Twitter membership has not been growing. If membership numbers decline, any hope that Twitter might be a major tech growth firm would disappear.

In the most recently reported quarter, monthly active users were 335 million, down slightly from 336 million in the immediately previous quarter. While revenue rose 22% to $711 million, advertisers may flee the company because of the controversies. That, in turn, will make the shares even less attractive.

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Twitter management posted disappointed forward guidance:

For Q3, we expect:

• Adjusted EBITDA to be between $215 million and $235 million

• Adjusted EBITDA margin to be between 33% and 34% • Stock-based compensation expense to be in the range of $85 million to $90 million

For FY 2018, we expect:

• Stock-based compensation expense to be in the range of $300 million to $350 million • Capital expenditures to be between $450 million and $500 million

Note that our outlook for Q3 and the full year 2018 reflects foreign exchange rates as of July 16, 2018.

Twitter’s regulation problems can only make those numbers worse.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.