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Tech Stocks This Week: Twitter Stock Soars, iRobot Stock Plummets, and More

By Daniel Sparks - Feb 10, 2018 at 1:45PM

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It was a volatile week for the stock market. But two of these stocks saw much larger swings.

Earnings season continued this week, sending some tech stocks soaring and others plummeting. Others remained particularly steady after their reports.

Here are three interesting stories from tech stocks this week that all managed to solicit significantly different reactions from investors:

  1. Twitter (TWTR 2.25%) stock soared when the company swung to a profit and reported higher-than-expected revenue.
  2. iRobot (IRBT 1.80%) stock took a hit after the company reported weaker-than-expected bottom-line guidance.
  3. Activision Blizzard (ATVI 0.91%) stock held steady after reporting results ahead of management's guidance for the quarter.
A woman looking at her smartphone while using her laptop

Image source: Getty Images.

Twitter soars

For Twitter's fourth quarter, investors were hoping the social network would show signs that it was close to returning to top-line growth. Instead, Twitter said it already returned to growth. Revenue was up 2% year over year in Twitter's fourth quarter -- a distinct change from the 4% year-over-year revenue decline it reported in its third quarter of 2017.

Other key achievements during the quarter included returning to GAAP profitability with earnings per share of $0.12, a fifth consecutive quarter of double-digit daily active user growth, and 10% year-over-year growth in its data licensing revenue.

Twitter stock soared after the report was released -- and shares finished the week up 22% even as the S&P 500 pulled back 5%.

iRobot plummets

Despite reporting 54% revenue growth and guiding for 2018 revenue above analysts' estimates, iRobot still managed to plummet after the company released its fourth-quarter results, falling around 30%. Bearish sentiment toward the stock probably reflected iRobot's lower-than-expected guidance for its full-year earnings per share.

iRobot CEO Colin Angle's attempt to explain its lower-than-expected guidance for earnings per share during the company's quarterly conference call failed to alleviate concerns. "I want to reiterate that iRobot is committed to a profitable growth strategy, showing an improving top line and bottom line," Angle explained. "But at this moment in time, with the market accelerating in its growth and competitive pressure coming into the markets, we made a choice to double down on ensuring we had adequate dry powder to drive that top-line growth."

iRobot stock fell a total of 35% last week.

Activision Blizzard holds steady

On Thursday, Activision Blizzard reported strong results that helped the gaming company finish the year with record revenue and cash flow, as well as important new customer engagement milestones.

Fourth-quarter revenue was $2.04 billion, up from $2.01 billion in the year-ago quarter and far ahead of management's guidance for fourth-quarter revenue of $1.7 billion. Non-GAAP EPS was $0.49, down from $0.65 in the year-ago quarter, but well ahead of guidance for non-GAAP EPS of $0.36. For the full year, Activision's revenue and non-GAAP EPS were $7.02 billion and $2.21, up from $6.61 billion and $2.18 in 2016.

For 2018, Activision said it expected strong growth, guiding for revenue of $7.35 billion and non-GAAP EPS of $2.45.

Importantly, Activision said players across Activision, Blizzard, and King games spent an average of over 50 minutes per day gaming for the second quarter in a row.

The stock traded about 1.9% higher after Activision's earnings release -- about in line with the S&P 500's rise on Friday. For the week, shares were down about 6%, slightly worse than the S&P 500's 5% pullback.

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Stocks Mentioned

iRobot Stock Quote
iRobot
IRBT
$37.41 (1.80%) $0.66
Twitter, Inc. Stock Quote
Twitter, Inc.
TWTR
$38.23 (2.25%) $0.84
Activision Blizzard, Inc. Stock Quote
Activision Blizzard, Inc.
ATVI
$78.57 (0.91%) $0.71

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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