Shares of Twitter Inc soared in premarket trade

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Shares of Twitter Inc soared in premarket trade on Wednesday after the microblogging service reported better-than-expected user growth.

Despite stiff competition from Facebook Inc and Snap Inc, Twitter’s monthly active users, one of the most closely watched metrics for analysts, increased by 6 percent, or 18 million, to 328 million in the first quarter from a year earlier, reports Reuters.

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Analysts on average had expected 321.3 million monthly active users, according to market research firm FactSet StreetAccount.

Twitter also said daily active users rose 14 percent in the first quarter from a year ago. Twitter does not disclose the number of total daily active users. Twitter shares were up 11 percent at $16.25 in premarket trade on Tuesday.

“Twitter is becoming more relevant to consumers. They are making their products easier to use. And there is a global thirst for news and information that they are benefiting from,” said BTIG analyst Richard Greenfield.

“We believe usage will drive meaningful revenue and profit growth in the next few years.”

Twitter’s revenue, however, fell 7.8 percent to $548.3 million in the first quarter, its first drop since its initial public offering.

Net loss narrowed to $61.6 million, or 9 cents per share, in the first quarter ended March 31, from $79.7 million, or 12 cents per share, a year earlier. Excluding items, the company earned 11 cents per share, beating the estimate of 1 cent per share.

Twitter’s user growth has stalled in the past few quarters and the company has been trying to convince advertisers that it will strengthen its user base.

As part of its efforts, the company has updated its product offerings including live video broadcasts from its app and launched new features to attract users.

Twitter’s weak performance has raised questions about Chief Executive Jack Dorsey’s leadership and whether the company would be bought by a bigger media firm. Financial markets speculated about a sale of Twitter last year, but no concrete bids were forthcoming.

Twitter’s advertising revenue fell 11 percent to $474 million in the quarter, above the average analyst estimate of $442.7 million, according to market research firm FactSet StreetAccount.

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