On Pandodaily, David Holmes’ blog post discusses the results of Twitter’s third quarter earnings report, which falls perfectly under the predictions of Wall Street analysts. Twitter brought in $361 million of revenue compared to the expected $351 million and also picked up 13 million new users. Despite the seemingly positive results, Twitter’s stocks dropped as much as 13% in the first 30 minutes after the release of the report, which was surprising to me.

After considering Holmes’ analysis on the results, what seemed like promising results at first glance, to my dismay, actually hints failure. In his blog post, Holmes compared the 13 million new users, which seems like a hefty number, to the 284 million current users. When put into perspective, the user growth becomes incredibly insignificant and it has actually been decelerating for the past 5 years. Holmes further discusses Twitter’s temporary monetization growth and how it will eventually be flattened by decreasing user growth. His analysis on the earnings report changed my perception on how I examine earning reports because Holmes not only studies how the company is doing now, but also compares these results to the past results and what the company could experience in the future. Furthermore, he was able to foresee the future adjustments of Twitter according to market trends, which I believe is critical skill of a successful investor. Seeing how thorough and professionally Holmes was able to analyse Twitter’s earnings report, it encourages me to consider these points as well when I analyse earning reports in the future.