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What Twitter’s Layoffs Mean for Its Stock

The micromessaging service said Tuesday it would trim its workforce by up to 336 employees, or about 8%. Twitter also said it expects third-quarter revenue and adjusted earnings, which exclude stock-based compensation, will come in at or above the high end of its previously projected ranges.

Twitter won’t report earnings until Oct. 27, so the preannouncement took some sting out of the layoff news. The stock rose Tuesday afternoon after falling sharply Monday on earlier reports of layoffs.

For a supposed growth company like Twitter, a downshift into cost-cutting mode isn’t necessarily what investors want to see. Early-stage companies typically invest heavily in their growth upfront to achieve profitability down the line, eventually...