Why Is Everyone Ignoring This Problem With Twitter?
Twitter (NYSE: TWTR) reported third-quarter earnings results that weren't as bad as analysts expected. Revenue and non-GAAP profits beat the consensus, and monthly active users increased modestly. But what really caused the stock to jump was Twitter providing an outlook for GAAP profitability in the fourth quarter.
To be clear, Twitter has said its goal is to become profitable on a GAAP basis in 2017 since last year. But now it looks like it's actually going to happen -- at least temporarily.
The market sent shares higher following Twitter's earnings, but everyone seems to be ignoring this key caveat to Twitter's soon-to-be profitability. The company got there by cutting costs, and revenue growth will be hard to come by in a world where Facebook and Google dominate digital advertising.
Source: Fool.com
