Twitter Soars 16 Percent on Strong User Growth, Smaller Losses

Social media company is turning heads after reporting it could turn profit by end of 2017

Twitter said it’s been overestimating its monthly active users for years, and Wall Street doesn’t seem to care.

Shares of the social platform have rocketed up nearly 15 percent in early morning trading on Thursday, after the company hinted at imminent profits in its third quarter earnings report — despite announcing it had been miscalculating its MAUs by millions.

“We discovered that since the fourth quarter of 2014 we had included users of certain third-party applications as Twitter MAUs that should not have been considered MAUs,” the company mentioned in a statement accompanying its earnings.

The error led to the company slashing 2 million users off the first half of 2017 and another million from the fourth quarter of 2016.

But investors let it slide, after Twitter reported it had added 4 million MAUs during the third quarter — a 14 percent jump year-over-year. (Apparently their internal calculations can now be trusted.) The bump pushes Twitter’s MAU count to 330 million, although the company still held back on releasing its number of daily active users.

Another reason Wall Street is happy? Despite seeing its revenue drop 4 percent year-over-year, Twitter slashed its losses and hinted at turning a profit by the end of 2017. The San Francisco-based company posted a loss of $21 million during the third quarter, in comparison to its $103 million net loss during the third quarter of 2016.

“We will likely be GAAP profitable,” the company mentioned in its forward outlook.

Twitter reported revenue of $590 million and 10 cents earnings per share, beating expectations of $586.7 million and 5 cents a share.

“This quarter we made progress in three key areas of our business: we grew our audience and engagement, made progress on a return to revenue growth, and achieved record profitability,” Twitter CEO Jack Dorsey said in a statement.

After earnings, Twitter breached $20 a share for the first time since July.