Twitter’s once-hot stock is cratering in premarket trading after the company added plenty of new users but struggled to sell advertising to market to them. Shares of Twitter fell by nearly 21% on Thursday, set to erase roughly half of the stock’s gains this year. Revenue for the third quarter rose only 9% to $824 million, coming in well below investors’ expectations. Twitter (TWTR) blamed several bugs in its advertising products and slower-than-expected demand for advertising in the summer months.
It also forecasts revenue to remain significantly weaker than it originally anticipated for the remainder of the year because of its advertising problems. Twitter expects to bring in just $940 million to $1 billion next quarter, mostly short of the $1 billion Wall Street analysts had expected. The company expects that it will earn $130 million to $170 million in the quarter, compared to the $207 million analysts had forecast.
Profit also tumbled to $37 million, which is substantially lower than the $789 million it reported for the same period a year ago. Prior to Thursday’s open, shares were up 35% for the year. It’s now only up 9% for the year.
But the platform is still attracting users: Twitter added 6 million users since the last quarter and 21 million users compared to the same period a year ago. EMarketer analyst Jasmine Enberg said in a note the company’s “momentum from the past several quarters has cooled.”