Lack of ad dollars blamed for Twitter's disappointing Q3 sales forecast
Twitter has cited increased competition and the fact it is trading at a premium (cost per engagement) to rivals for its Q3 sales forecasts ($590m to $610m) coming in below analysts’ expectations ($678.2m). The news reportedly led Twitter's stock down 11% in after-hours trading. Twitter plans to expand further into mobile video to boost ad revenues, with contracts already signed to livestream 10 NFL Thursday night games among other events.

Twitter's competition is eating its lunch.

The company didn't phrase it that way Tuesday when it forecast third-quarter sales of $590 million to $610 million, well below analysts' estimates of $678.2 million.

Twitter's third-quarter revenue forecast was dramatically lower than analysts expected, sending shares down in after-hours trading. Revenue in the second quarter also missed expectations. James Martin/CNET

Twitter put it this way, instead: "First, there is increased competition for social marketing budgets," the company wrote in its letter to shareholders to shareholders. And second, "We're still priced at a premium CPE [cost per engagement] relative to others."

In other words, rivals like Facebook and Snapchat are getting a bigger share of companies' advertising dollars, largely because Twitter is more expensive.

Shares fell more than 11 percent in after-hours trading on the news.

To attract advertisers, the company said it plans to put greater emphasis on mobile video. That ties into recent a deal to live-stream 10 NFL Thursday night games this season. In addition, Twitter will stream National Basketball Association stream pregame shows, broadcast some games from the Pac-12 conference and live-stream Major League Baseball and National Hockey League games. Twitter will also be the home of a nightly sports-highlights show called "The Rally."

The company on Tuesday also reported a 1 percent increase in the number of monthly active users in the second quarter, rising to 313 million from 310 million. Profit minus some costs, such as employee stock compensation, was 13 cents a share, beating the 10 cents a share estimate of analysts polled by Thomson Reuters. Second-quarter revenue was $602 million compared with analysts' estimates of $607 million.