Twitter's earnings may spell bad news for initial public offerings (IPOs), and its surely not good news for Internet stocks.
On Tuesday, I said that Twitter's earnings and revenue were not what the Street cared about, and that what mattered was active monthly users. That number is decelerating: it was 25 percent in the first quarter, compared to 30 percent in the fourth, 39 percent in the third, and 44 percent in the second.
This is either because Twitter is reaching the limits of the number of people who are interested in the service, or there may be other messaging platforms that are available (perhaps Facebook, Instagram) that are making inroads.
CEO Dick Costolo, in an interview on our air, spent a lot of time discussing television and mobile advertising. All of that is good, but you can see from the stock reaction what the Street is watching.
As for IPOs, we've already had a selloff in internet names, with investors becoming more discerning about who the big winners will be and who won't. Here's a company that a lot of people thought could be the next Facebook in terms of growth.
What does all this have to do with IPOs? Because Twitter went public in November amid a tidal wave of tech IPO interest similar to what we have now. Now look at what's happened.
IPO investors see a company going from pricing at $26 in November, subsequently rocketing to almost $75 by the end of the year—but now languishes in the mid-$30s again. That is the kind of volatility that does not give cheer to IPO investors.
Waiting in the wings, of course, are Alibaba and Box, two of the hotly awaited tech offerings in the market.
One thing's for sure: investors have not made much money in tech IPOs. Of the 24 tech IPOs done this year, the average first day pop has been up 28.1 percent, which is pretty good. Yet the average return has been up only 2.6 percent from the IPO price.
In other words, the average tech IPO this year has been a nice first day pop, and then—for the most part—gone straight down.
And while we're on bad news, a GDP of 0.1 percent can't elicit any cheer in IPO land, either.
The effect of all this: lower IPO prices!
1) With 62 percent of the S&P 500 reporting earnings, we have earnings growth of 1.7 percent, and revenue growth of 3.5 percent. From essentially zero at the start of the quarter, we are slowly moving toward roughly 3 percent growth in earnings, which is one of the weakest quarters since 2012.
2) As far as the Federal Reserve policy meeting: don't expect much. No press conference, no new economic forecast. And Fed Chair Janet Yellen? Two weeks ago she gave a speech to the Economic Club in New York, where the key phrase seems to have been "slack." She used the word 14 times in her speech, as in here: "data suggest that there may be more slack in labor markets than indicated by the unemployment rate."
My point is that Yellen will likely continue her uber-dovish tone.
3) AMC's results show the movie business is not dead. Attendance was up 5 percent, while ticket prices up 2 percent and they're paying a quarterly dividend. Not bad.
--By CNBC's Bob Pisani