Twitter's Stock Is Going Bonkers This Morning

FireworksREUTERS/Alexander DemianchukPeople watch a laser and fireworks show over the Neva River and the Peter and Paul Fortress in St. Petersburg, June 21, 2014. The show marks the annual school leavers day.

Twitter’s stock is up 26% this morning after an earnings report that demolished expectations.

Twitter beat on revenue, EPS, guidance, and most importantly monthly active users.

As a result the stock has been soaring. Right after earnings, it rose as much as 35%. Since then, it’s cooled slightly, and now it’s up 26% to ~$48.50.

Twitter reported that it has 271 million active users, which was ahead of expectations of 267 million users.

After the company reported earnings, we talked to Twitter CEO Dick Costolo about the bump in users.

He says Twitter is getting new users because it is improving the “onboarding” process for Twitter. When people sign up for Twitter, they’re more quickly getting feeds to follow that they like. Those feeds are keeping them engaged with the product.

Everyone is pretty happy with Twitter today, but we would caution some restraint for now. This quarter was great, but it was largely about beating significantly lowered expectations.

If you back up a bit, Twitter’s monthly users were up 24% on a year-over-year basis this quarter. Last quarter they were up 25% and the world was writing eulogies for the company. Facebook, which is a comparable product, added 41 million users in Q2 while Twitter only added 16 million.

So, things are good for Twitter, but they’re still not great. The company has a lot of work to do.

Costolo knows that, though. On the call, he said, “To be perfectly frank, I think we can be a lot better.”

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