Twitter Inc stung by stall in user growth
Investors skeptical
SAN FRANCISCO, April 27, (AFP): Twitter shares slid Tuesday after a quarterly update worsened investor fears that the one-to-many messaging service can win enough users to be a lucrative, mainstream hit.
Twitter posted a loss for the first quarter of 2016 of $80 million, compared with a loss of $162 million in the same period a year ago.
Revenues meanwhile jumped 36 percent year-over-year to $595 million. Wall Street had expected even better revenue, and the Twitter financial forecast for the current quarter did not inspire visions of better days.
“With less than exciting results in the very first quarter following the new plan under CEO, Jack Dorsey, investors are likely to remain skeptical,” Sterne Agee CRT said in a note to investors.
But in a key metric in the fast-evolving social media world, Twitter’s trend was flat. The number of monthly active users was 310 million, up three percent from a year ago and only slightly higher than the 305 million in the previous quarter.
Changed
Twitter changed the way it measures active users, no longer counting those who follow via SMS text messaging. The number reported in the fourth quarter including that group was 320 million.
Twitter shares skidded more than 13 percent at $14.36 in after-hours trading, extending their slump over the past two years.
Since its much-anticipated public offering in November 2013 at $26, Twitter shares saw a jump to $60 the following month but have been sliding since then.
Twitter’s growth woes have led to the return of co-founder Jack Dorsey as chief executive, and he has promised new services in a bid to boost growth and user engagement.
“As we outlined last quarter, we’re focused on what Twitter does best -live,” Dorsey said in a statement.
“Twitter has always been the best place to see what’s happening now. Whether it’s breaking news, entertainment, sports, or everyday topics, only Twitter lets you connect with people anywhere in the world with live conversation.”
Exclusive live events, collaborations, and attracting marketers are important ingredients for implementing Twitter’s ‘live’ strategy, according to Sotirios Paroutis, an associate professor of strategic management at Warwick Business School.