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Twitter surges on user growth figures

Twitter shares surged in morning trade Wednesday (July 30) after the messaging platform eased investor concerns with a quarterly report showing strong user growth and robust revenues. 

NEW YORK: Twitter shares surged in morning trade Wednesday (July 30) after the messaging platform eased investor concerns with a quarterly report showing strong user growth and robust revenues. In the first half hour of trading, Twitter rallied 20 percent to US$46.15, the highest levels since March.

Investors focused on the number of monthly active users hitting 271 million, up 24 percent when compared with the same period a year earlier. Revenues meanwhile leapt to US$312 million, and the market appeared the shrug off Twitter's widening loss at US$145 million.

Youssef Squali at Cantor Fitzgerald called the financial results "very strong" and added that "what's more important is that the drivers for this growth seem sustainable, implying faster-than-expected growth and margin over time."

Ross Sandler, analyst at Deutsche Bank, said the quarterly figures appear to have calmed skepticism about Twitter. He said that fundamentals for Twitter "are all trending in the right direction" and said the opportunity for the company is "under-appreciated."

After Twitter's successful public offering last year, the stock surged to over US$70, but since then skeptics have wondered whether it can grow its user base and become profitable. Daniel Ernst at Hudson Square Research nevertheless maintained his "sell" rating for Twitter, saying that "the platform is not likely as applicable to as broad an audience" as Facebook.

"While we see no obvious negative catalyst near term, expectations are rising and... Twitter in our view is grossly overvalued,” he said.

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