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Twitter shares fell 7 per cent in pre-market trading on Thursday after the company said it would have to spend more to improve “health, conversation, revenue product and sales, and platform” this year.
The company beat Wall Street’s expectations to report a jump in revenues after a series of changes designed to attract advertising dollars from Google and Facebook paid off for the smaller social network.
But investors balked at guidance that operating expenses would increase 20 per cent in 2019 as the company is forced to splash out after controversies over misinformation, online abuse, hate speech and freedom of speech.
Twitter on Thursday reported revenues that rose 26 per cent to $909m in the fourth quarter, excluding currency effects. The results followed upbeat performances from Snap and Facebook in the run-up to Christmas, which largely shrugged off last year’s controversies to report better than expected user and advertising figures.
Jack Dorsey, founder and chief executive, said users had embraced changes to the platform: “We enter this year confident that we will continue to deliver strong performance by focusing on making Twitter a healthier and more conversational service.”
Social networks have faced an exceptionally difficult year in which a catalogue of scandals have forced the companies the platforms to take more responsibility for content amid fears of the impact on advertising revenues.
For Twitter, the controversies have not yet had an impact on ad sales, which comprise the bulk of its revenues. Advertising sales grew 25 per cent to $791m in the three months to December 31.
Twitter’s $255m in net income in the fourth quarter also beat Wall Street’s expectations and brought to a close the company’s first full-year of profitability. However it continued to struggle with user numbers, reporting its third consecutive quarterly drop in monthly active users to 321m.
