Twitter Inc (NYSE:TWTR) has long been a troubled stock that has not been able to stay out of the red and has failed to return to its IPO price. Since listing on the NYSE, Twitter’s stock has declined nearly 20%. However, after posting a profit for the first time ever last week, the social media giant’s share price has risen more than 30% in the past few weeks.
It’s a great sign that Twitter has been able to turn a profit and it did so despite sales rising only 2% from a year ago. The big driver behind the company’s first-ever finish in the black was a decline in its operating expenses, which decreased 28%. Twitter saw an improvement across all of its operating line items, with research and development expenses seeing the biggest improvement with a 34% decline year-over-year.
As a result of the strong performance, investors have become bullish on the tech stock that finally is showing signs of profitability. The big question is whether this was a one-time event or if Twitter can build on these results and continue to stay in the black.
The company’s 12% profit margin this past quarter suggests this was no fluke.
Profits can be hard to come by in the tech industry as companies focus on growth and profitability normally takes a back seat. Consider for example Amazon.com, Inc. (NASDAQ:AMZN), which has soared more than 75% in the past year, and yet it has averaged a profit margin of just 1% in the past four years.
