Twitter shares crash after lower revenue announcement

isaac

May 6, 2015 5:35 PM

Twitter recently reduced its projected revenue for 2015 following a significant reduction in Q1 revenue, causing a slump in the company’s shares.

Social network Twitter Inc., has announced a reduction in its full-year forecast from the earlier projected $2.3 billion to $2.35 billion down to $2.17 billion to $2.27 billion. The announcement was made after the company reported a quarterly revenue that fell short of estimates.

Following the announcement, the company's shares went down as much as 24 percent earlier this year.

Explaining the cause of revenue crash, Twitter stated that its new direct response ads did not enjoy as much demand as expected. Advertisers limited their spending on ads and the click rate on ads fell during the first quarter of the year.

However, the company expects a significant improvement by the end of the second quarter, investors obviously do not.

Twitter's monthly active users however increased in line with analysts' projections by 18 percent to 302 million. To improve its direct response advertising, Twitter recently acquired TellApart, a marketing technology company.

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isaac