What happened
Shares of microblogging platform Twitter (TWTR) outpaced the market by a wide margin last month, gaining 21% compared to a 4% jump in the S&P 500, according to data provided by S&P Global Market Intelligence.
The stock is up 32% in the past year.
Image source: Getty Images.
So what
April's spike was powered by strong first-quarter earnings that investors celebrated late in the month. The Q1 report showed that the user base grew compared to the prior quarter (but was down year over year). Twitter paired that improvement with rising revenue and falling costs so that operating income jumped to $94 million, or 12% of sales, from $75 million, or 11% of sales, a year ago.
Now what
CEO Jack Dorsey and his team are focused on improving the quality of the conversation on the platform by removing hate speech and quickly responding to harassment and safety challenges. User growth might remain sluggish during this period when compared to social networking peers like Facebook.
However, Twitter earned praise from investors for showing that it can increase engagement while generating healthy operating profits. Platform upgrades also make the experience better both for users and advertisers, boosting the platform's value in the process.
