The short-messaging juggernaut has never worried about profits in the past for two reasons: (1) It wasn't a public company, so it didn't need to disclose earnings to the public, and (2) profits didn't matter, as the goal was to create a trendy product, grow a massive user base, and pique the interest of advertisers. That's the same call from Mark Zuckerberg's Facebook playbook. But while FB has proved profitable, Twitter hasn't yet turned a profit.
Is "microblogging" worth the $37 billion? Twitter's enormous market value (measured by the market capitalization -- i.e., the sum of the value of every Twitter stock flying around out there) must be justified by huge future profits ... or else.
The takeaway is that Twitter's earnings report was full of bad news that well exceeded its 140-character limit -- The total losses of $511 million were double what Wall Street expected, and negative trends in user growth and costs caused a huge 18% drop in the stock in after-hours trading. The stock had risen 47% since its November '13 IPO, but Wednesday's earnings news was a #RealityCheckBro.
2. Wall Street gives Yelp earnings great review
Five stars for that fourth-quarter earnings report from Yelp (NYSE:YELP). Despite brutal amateur food photos and typo-packed reviews from hungry people with way too much time, Yelp stock popped more than 7% in after-hours trading Wednesday on the company's $70 million in revenues last quarter -- that number smacked analysts' expectations like they were bad fish tacos.
Interestingly, a jump in defamation lawsuits by business owners hit with bitter reviews didn't hurt Yelp's bottom line. In fact, the number of total reviews on the site rose by 47% to 53 million, and the number of restaurants listed grew by 69% to 67,000.
The takeaway is that it's all about mobile. Get used to it. More than half the traffic on Yelp came through smartphones in 2013, as did a third of the reviews posted. Now the company truly plans to focus on growing its mobile app usage in 2014, so you can eat that sloppy good BaoHaus pork bun in one hand, and unnecessarily tell the world how feel about it with the other.
The number of the day is 175,000. That's how many new jobs payroll-tracking firm ADP expects were added in January. That's lower than the 185,000 the economists were expecting (especially after the December jobs report failed to impress despite the impressive jobs growth throughout 2013).
That wasn't pretty. Shares of beauty giant Estee Lauder (NYSE:EL) tumbled more than 5% Wednesday on an ugly earnings report -- profits slipped 3.4% last quarter thanks to the unimpressive U.S. shopping season for retailers.
- Weekly jobless claims
- The U.S. International Trade Report (it's imports vs. exports, baby)
- Fourth-quarter earnings reports: AOL, Expedia, Universal Studios
Nick Martell and Jack Kramer have no position in any stocks mentioned. The Motley Fool recommends ADP, Facebook, Twitter, and Yelp and owns shares of Facebook and Papa John's International. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.