Twitter plunges 17% after posting a major slump in daily active users in the third-quarter

• Twitter’s third-quarter earnings sent its stock price as much as 17% lower in pre-market trading on Friday.
• While the company delivered better-than-expected revenue for the quarter, it fell fall short on user growth.
• Twitter grew its total daily active users by only 1 million from the same period last year to 187 million, falling shy of the 195 million analysts expected.
• The company’s third-quarter earnings came one day after Twitter CEO Jack Dorsey defended its content moderation policies in front of the Senate.
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Twitter shares fell as much as 17% in pre-market trading on Friday after the company’s daily active users in the third-quarter fell far short of analyst expectations.

While the social-media firm crushed Wall Street forecasts on revenue, user growth reached only 187 million daily users compared to an expected 195 million. The number was still 29% higher from a year ago.

The company’s total revenue rose 14% to $936 million, handily beating the $777 million estimate Wall Street analysts had estimated. Twitter’s ad revenue jumped 15% year-on-year to $808 million despite lower ad spending this year due to a widespread response to civil unrest in the US.

The boost in ad revenue was largely driven by advertisers increasing their ad spending after the return of live events and previously delayed product launches, Ned Segal, Twitter’s CFO, said in a statement.

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Twitter warned that as the US election approaches, it would be “hard to predict” how advertiser behavior may change.

The company’s third-quarter earnings follow a tumultuous year including a massive bitcoin-related hack that compromised 130 accounts, prompting the FBI to launch an investigation into the scam.

Separately, Twitter CEO Jack Dorsey this week defended the company’s content moderation, and denied multiple times during a Senate hearing that the company has the power to influence elections. 

Twitter’s shares closed 8% higher at $52.43 per share on Thursday, but traded 17% lower in pre-market on Friday. Its stock is up by 75% year-to-date.

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