Stock Market Today: Chipotle Customers Increase but Twitter Monthly Users Shrink

Both companies reported better-than-expected profit growth in the fourth quarter.

Jim Crumly
Jim Crumly
Feb 7, 2019 at 5:04PM
Consumer Goods

Worries about trade and global growth came to the foreground again Thursday, and the Dow Jones Industrial Average (DJINDICES:^DJI) and S&P 500 (SNPINDEX:^GSPC) both fell about 1%.

Today's stock market

Index Percentage Change Point Change
Dow (0.87%) (220.77)
S&P 500 (0.94%) (25.56)

Data source: Yahoo! Finance.

A drop in the price of crude oil hit energy stocks, and the SPDR S&P Oil & Gas Exploration & Production ETF (NYSEMKT:XOP) plummeted 4.3%. The technology sector was also weak; the Technology Select Sector SPDR ETF (NYSEMKT:XLK) closed down 1.4%.

As for individual stocks, Chipotle Mexican Grill (NYSE:CMG) popped on solid earnings and Twitter (NYSE:TWTR) fell despite strong results.

Check out the latest Chipotle and Twitter earnings call transcripts.

Falling graph with coins and city skyline.

Image source: Getty Images.

Customers are coming back to Chipotle

Chipotle CEO Brian Niccol has been on the job for almost a year now, and results from the company's fourth quarter had investors cheering the turnaround he's cooked up, and shares soared 11.4%. Revenue grew 10.4% to $1.2 billion on a 6.1% increase in comparable-restaurant sales. Adjusted earnings per share jumped 11% to $1.72.

The comps were the highest in nearly two years, but the best news was that 2 percentage points of that increase came from transaction growth, reversing several quarters of declining customer traffic. Restaurant operating margin was 17%, up from 14.9% in the period a year ago. For the year, Chipotle increased its restaurant count by 3.4% to 2,491 and grew comparable sales 4%.

Chipotle stock has returned to levels last seen in late 2015, when the first of several food safety incidents scared away the company's customers. Niccol has reinvigorated the brand, bringing in menu innovations and investing in digital ordering, loyalty programs, delivery, and improved operational efficiency.

Twitter beats expectations but stirs up investor worry

Twitter closed out its first year of profitability by beating expectations for the top and bottom lines, but investors focused on declining monthly users and weak guidance, sending shares down 9.8%. Revenue grew 24.2% to $909 million and non-GAAP earnings per share came in at $0.31, compared with $0.19 last year. Analysts were expecting the company to earn $0.25 per share on revenue of $870 million.

Twitter is changing the way it reports user engagement, saying it will no longer report monthly active users, which were 321 million in Q4, down 9 million from the period a year ago and 5 million from Q3. Instead, it will report "monetizable daily active users," which grew 9% year over year and 1% sequentially to 126 million.

Twitter expects Q1 revenue to be between $715 million and $775 million, below the analyst consensus of $762 million.

Investors may have felt the switch to an engagement metric that puts the company in a better light was a little too convenient, heightening concerns about weak guidance and rising costs while obscuring the progress the company has made.