Twitter sinks as it racks up £133m loss
SHARES in Twitter plunged almost 13pc after its losses mounted and it reported a shock drop in advertising.
The social media giant lost £133m in the last three months of 2016, compared with £72m a year earlier.
Investors took flight as it revealed its advertising revenues had not kept up with a rise in user numbers.
Not even a rally in the US stock market S&P 500, which hit an all-time high of 2307.87, could save Twitter from a sell-off which led to a 12.8pc drop in shares to $16.34 (£13.08).
Concerns are growing for the future of Twitter, particularly as it faces the threat of rival Snapchat – an app where users send a message with photographs. Snapchat is set to float in the US in March with an expected value of £20bn.
Experts fear Twitter is struggling to turn the growing number of active monthly users – up 4pc to 319m – into advertising revenue, which fell slightly to £510m.
And not even the explosive Tweets from new US President Donald Trump could boost its figures. Revenue climbed just 1pc from £568m to £573m.
Some predicted Trump’s use of Twitter would lift the site, as users flocked to view his tweets.
However Twitter’s chief operating officer Anthony Noto said: ‘The president’s use of Twitter has broadened the awareness of how the platform can be used. But it’s very hard for a single person to drive sustained growth.’
The results mark Twitter’s slowest quarterly revenue growth since it listed on the New York stock market in November 2013.
It is far below its listing price of $26, and a third less than its alltime share price high of $69 in January 2014.
Twitter has been losing out to rivals including Facebook and Google, which are eating up advertising revenue. Meanwhile, Snapchat is drawing in much younger users. Twitter is now forecasting adjusted earnings to be between £59m and £76m for the first quarter, less than half of the £171m reported in the fourth quarter.
It has also slashed 350 jobs – close to 9pc of staff – to cut costs
Michael Pachter, a Wedbush Securities analyst, said: ‘There isn’t a growth story here. They have to convince advertisers they will reach an expanding audience or they will have trouble competing for new revenue dollars.’
But Jack Dorsey, chief executive, sought to divert attention by pointing towards a 2m boost in average monthly active users.
‘We overcame the toughest challenge for any consumer service at scale by reversing declining audience trends and reaccelerating usage,’ said the 40-year-old.
He said it would take time to show results in driving revenue.
Yesterday’s poor results came after Twitter was reportedly considering a takeover deal. Salesforce, Google and Walt Disney had been thought to be interested but abandoned their plans.