Twitter still has revenue problems, and its stock is down big

Twitter missed Wall Street’s revenue estimates. Again.

Twitter reported Q2 earnings on Tuesday and investors aren’t happy.

The key issue is likely Twitter’s Q3 guidance. The company says it is targeting $590 million to $610 million in revenue next quarter. Early analyst estimates pegged that number at $678 million, according to Yahoo Finance. So that’s a big discrepancy.

The Q2 numbers weren’t fantastic either. Twitter added three million new monthly active users last quarter — what analysts expected — bringing the company’s new total to 313 million. But Twitter also reported profits of 13 cents per share on revenue of $602 million for the quarter, which is lower than expected.

The stock was immediately down more than 10 percent on the news and seems to be hovering there.

Wall Street was looking for profits of 10 cents per share on $607 million in revenue. (Interesting note: These are basically the same expectations Wall Street set last quarter, and Twitter missed on revenue then, too.)

So here’s Twitter’s dilemma: CEO Jack Dorsey has effectively been in charge of Twitter for the past year, and it’s clear that the company’s growth problem is still a problem. On top of that, Twitter has now missed revenue estimates two quarters in a row, and significantly cut its Q3 guidance. So there’s a clear revenue problem to go along with the growth problem. Not good.

To state the obvious, this kind of production (or lack thereof) doesn’t help Dorsey’s case for running two companies (remember, he also runs Square). It also puts pressure on the board to consider broader options for the company, namely selling. Twitter is in the very beginning stages of trying to transition its business to look more like TV, but it doesn’t have a lot of runway left.

We are still digging through all the data now and will update this story as we learn more. For those interested, Twitter will hold a call with press and investors at 5 pm ET Tuesday, and we’ll be listening in. Unfortunately, you won’t be able to watch the call on Periscope this quarter — Twitter isn’t doing that any more.