USER GROWTH STALLS AT TWITTER
2nd-quarter revenue beats estimates as ‘Trump bump’ fades
It seems the “Trump bump” didn’t extend into Twitter’s second quarter.
The company reported 328 million monthly active users during the period, up 5% from a year ago but no change from the previous quarter.
Shares dropped 14% Thursday to $16.84, lowest in a month.
Twitter has tried to entice new users by inking deals to livestream sporting events and concerts and by taking a harder stance on abuse — one reason users say they abandon Twitter accounts. But those efforts haven’t done enough, especially as social networks Instagram, Facebook and Snapchat aggressively fight for users’ time and attention.
Twitter said Thursday U.S. monthly user growth dropped to 68 million from 70 million last quarter. It reported 260 million monthly active users interna- tionally for the quarter, edging up from 259 million in the last quarter.
The dip in U.S. monthly active users is surprising, Wedbush analyst Michael Pachter says, considering one of its most prolific users is President Trump. Recently, Trump used Twitter to blast Attorney General Jeff Sessions and announce a ban on transgender troops in the military.
“They remind me of Best Buy, who just tries to milk more out of the same customer that walks through the door, but doesn’t try to do anything to get you in the door,” Pachter said.
Last quarter, Twitter reported a 6% boost in monthly active users, attributed in part to increased user interest in news and politics sparked by Trump.
Twitter’s lack of explanation for why user growth was flat is “striking,” said Jackdaw Resarch chief analyst Jan Dawson, especially since Twitter has revamped its experience over the last few months to make it easier to use.
As for daily active users, Twitter says they’re up 12% year over year, the third consecutive double-digit bump. But it’s slower than the 14% boost it recorded during the first quarter.
“The Trump effect lasted for exactly three months,” Pachter said.
Twitter’s user base pales in comparison to Facebook, fresh off its earnings results Wednesday. The company reported more than 2 billion monthly active users, while 1.32 billion use the service daily.
Among potential users, a lingering question about Twitter remains: Why and how do I use it? Dawson said Twitter needs to “drastically simplify” how to use the social network, shifting to a strategy where people can follow topics of interest instead of seeking out individual accounts.
“It’s not really clear how to get started, to get to the point where it’s useful for you,” Dawson said.
If the trends in weak user growth continue, the pressure on CEO Jack Dorsey is expected to ramp up. “It just feels like they’re making little concrete progress in terms of turning their major metrics around,” Dawson said.
For the quarter, Twitter reported $574 million in revenue, down 5% from a year ago but still ahead of analyst estimates, according to S&P Global Market Intelligence. Advertising revenue fell 8% to $489 million. Adjusted earnings per share were 8 cents, topping estimates of 5 cents.
“They remind me of Best Buy, who just tries to milk more out of the same customer that walks through the door but doesn’t try to do anything to get you in the door.” Wedbush analyst Michael Pachter