Twitter (TWTR  ) posted strong Q2 results that resulted in strong gains for the stock. However, shares weakened in the following session and are now 3% below its pre-earnings price. Twitter's stock has confounded investors as it has failed to keep up with its peers despite being more culturally influential. There was some optimism as online ad rates kept going up, the company was delivering more ads, and it was working on new ways to monetize its user base.

Inside the Numbers

In Q2, Twitter reported $0.20 in earnings per share which topped expectations of $0.07 per share. Revenue also beat at $1.19 billion vs expectations of $1.07 billion. This was a 74% increase compared to last year's Q2 and was a significant acceleration from 28% growth in the last quarter and was the fastest growth since 2014.

However, monthly daily active users came in slightly below expectations at 206 million vs 206.2 million. Yet, the company said that its monetizable daily active user count increased by 11%.

The company is also aggressively promoting its first subscription service which gives users access to more premium features such as an undo tweet button. It also launched its Clubhouse competitor Twitter Spaces which enables an audio chat for mobile users. It also introduced a Tip Jar feature and plans to launch a SubStack competitor for premium newsletters soon.

Twitter has done a poor job of monetizing the attention it commands. Many companies, brands, and following have been built on the platform, but they go off it for actual commercial transactions. For example, many Twitter Power users built significant followings and then monetized them through a premium Substack newsletter. Now, Twitter is looking to bring some portion of this back to the platform.

Next quarter, Twitter forecasts $1.22 billion and $1.3 billion in revenue which was above expectations of $1.17 billion. It did warn that hiring and expenses would increase by 30% as it invests in these endeavors.

Stock Price Outlook

Twitter has been a significant underperformer relative to its peers in the social media space. Despite that, investors should keep the stock on the radar as it has so much attention and influence that it seems inevitable that the company will able to figure out monetization like so many other platforms. Despite the lackluster market reaction to this earnings report, it's encouraging that the company is taking some small steps towards making it happen.