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Twitter Inc shares sank on Thursday as it reported a surge in ad sales but warned of rising costs and expenses and said user growth could slow in the coming quarters as the flow seen during the coronavirus pandemic fizzles.

The social media company also said stock based compensation for new hires would be more than expected this year.

Shares of Twitter fell 8.7% to $59.30 in trading after the bell.

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Twitter says it wants to reset after years of product stagnation, announcing in February bold goals to expand its user base, speed up new features for users, and double its revenue by 2023.

Ad revenue for the first quarter were $899 million, up 32% from the same period a year ago and beating analyst estimates of $890 million, according to IBES data from Refinitiv. Total revenue for the quarter was $1.04 billion, up 28% year-over-year and slightly higher than estimates of $1.03 billion.

The San Francisco-based company reported 199 million daily active users, up 20% year-over-year, compared to analysts’ estimates of 200 million, according to FactSet data.

Twitter repeated its warning that growth of its monetizable daily active users (mDAU) – its term for daily users who can view ads – could reach “low double digits” in the next quarters, likely hitting a low point in Q2.

‘TOO EARLY’ TO TELL

The company said in a letter to shareholders it was too early to understand the full impact of Apple Inc’s privacy policy change which began rolling out on Monday, but said its integration with a new ad measurement tool from Apple has increased the number of iOS devices it can target certain types of ads to by 30%.

Facebook Inc this week said its growth could “significantly” decline this year as Apple’s change makes it harder to target ads.

Twitter pledged in February a goal to double its annual revenue to $7.5 billion in 2023 from $3.7 billion in 2020. Responding to criticism that was summed up by CEO Jack Dorsey this year as “we’re slow, we’re not innovative, and we’re not trusted,” the company has recently snapped up newsletter platform Revue and podcast company Breaker and teased a litany of new products.

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The company, which last year launched vanishing tweets called “Fleets” similar to Snapchat’s ephemeral features, is also testing a live audio feature “Spaces” to compete with voice-app Clubhouse and has teased new ways for creators to make money on the site, from tipping to “super follows” where fans can pay for exclusive content.

Twitter said it expected total revenue to grow faster than expenses this year, assuming that the coronavirus is less of a factor and that it sees “modest impact” from Apple’s changes.

But it said in its outlook that stock-based compensation expenses for this year will amount to $600 million, up from its previous guidance of between $525 million to $575 million, as the company ramps up hiring. It forecast capital expenditures to be $900 million and $950 million for the full year.

Twitter said it expects headcount, as well as total costs and expenses, to increase at least 25% in 2021 on a year-over-year basis.

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