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Stock Market News: Twitter Flies Higher; Coke Is Still It

Dan Caplinger, The Motley Fool

Tuesday morning brought a strong start to the trading day on Wall Street, as investors were pleased with key earnings reports from some of the stock market's most influential companies. Favorable economic data also added to positive sentiment. Just after 11:30 a.m. EDT, the Dow Jones Industrial Average (DJINDICES: ^DJI) was up 122 points to 26,633. The S&P 500 (SNPINDEX: ^GSPC) rose 21 points to 2,929, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) climbed 81 points to 8,097.

Among the many high-profile earnings releases this morning, two were particularly noteworthy. Social media giant Twitter (NYSE: TWTR) scored a huge positive surprise with its latest financial report, while Coca-Cola (NYSE: KO) bounced back from recent struggles to produce encouraging results to begin 2019.

Twitter leaves shareholders a-twitter about earnings

Shares of Twitter soared 17% after the microblogging website operator reported its first-quarter financial results. The company's revenue was higher by 18% compared to year-earlier levels, and investors were pleased with a modest 8% rise in adjusted net income.

Blue Twitter bird logo on white background.

Image source: Twitter.

In particular, Twitter's results were reassuring to those who had feared that the platform's efforts to eliminate fake accounts would lead to dramatic downturns in traffic figures. Monthly average users were down 2% from year-ago levels, coming in at 330 million, but that was higher by 9 million from where they were three months ago. Even more encouraging was a notable rise in average monetizable daily active users, which were 134 million in the first quarter, up 12% from year-ago levels and by 8 million just in the past three months.

CEO Jack Dorsey highlighted Twitter's 18% rise in advertising revenue, but he also pointed toward "a more proactive approach to reducing abuse and its effects." In particular, tweets that share personal information or are abusive are increasingly getting taken down, and efforts to make the service more conversational in nature appear to be paying off.

Twitter also gave encouraging guidance for the second quarter, including revenue projections of $770 million to $830 million and operating income between $35 million and $70 million. Greater levels of spending on key initiatives might not lead to much earnings growth in the short run, but Twitter is taking steps to increase its relevance in an increasingly competitive social media space.

The real thing

Meanwhile, shares of Coca-Cola climbed almost 2%, making it one of the leading stocks in the Dow. The beverage giant reported a 5% rise in net revenue during the first quarter of 2019, led by organic growth, and adjusted earnings managed to post a 2% increase. That was especially noteworthy given an 11-percentage-point hit to Coca-Cola's bottom line from the strong U.S. dollar.

The best news for investors came from results of Coca-Cola's latest innovations. The Zero Sugar product continued to post double-digit percentage sales growth for the sixth quarter in a row, and the rollout of the new Orange Vanilla Coke lines within the U.S. market showed early promise. Other key brand contributors included the Simply smoothie line, European juice brand Innocent, and enhanced water products like Smartwater and Aquarius GlucoCharge.

Coca-Cola also expects the good times to continue. The company repeated most of its previous guidance for the full 2019 year, including 4% organic revenue growth leading to a 12% to 13% rise in currency-neutral sales and a low-double-digit percentage increase in adjusted operating income. After spending so much effort fighting against the negative perception of its legacy sugary soft drinks, Coca-Cola is finally starting to reap the full rewards of its strategic shift to broaden its beverage lines and offer a comprehensive set of liquid products to meet every consumer's wishes.

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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Twitter. The Motley Fool has a disclosure policy.