Twitter shares plunge a day after weak earnings report

Twitter shares plummeted more than 16% the day after the San Francisco social media company posted a weak quarterly earnings report that cast widespread pessimism about its prospects.

Shares of Twitter fell $2.89 to $14.86 at the end of trading Wednesday.

On Monday, the company missed Wall Street revenue estimates for the first quarter of 2016. It also forecast second-quarter revenue between $590 million and $610 million -- well below Wall Street estimates of $677 million.

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“Investor confidence is unlikely to return any time soon,” said Brian Wieser, an analyst for Pivotal Research Group, in a note to clients.

At the core of Twitter’s troubles is the growing belief the company will struggle to close the gap with rivals such as Facebook for advertising revenue.

Twitter is projected to capture 7.9% of worldwide social network ad spending this year while Facebook is expected to take 67.9%, according to eMarketer.

One glimmer of hope in Monday’s earnings call was the addition of new users. After posting no growth at the end of last year, Twitter reported 310 million monthly active users in the first quarter, up from 305 million the previous quarter.

Follow me on Twitter: @dhpierson.

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