Drop in active users wipes $7bn off Twitter’s value on Wall Street
TWITTER stock dropped by more than 20pc yesterday after the company announced the number of monthly active users fell by 1m.
Just a day after a historic plunge in the share price of Facebook, which alarmed investors with a warning of slowing growth and rising costs, Twitter said that the total number of active users – people who log into the service every month – had fallen by 1m to 335m.
The drop compounded fears that the use of social media platforms may have peaked and saw some $7bn (£5bn) wiped off Twitter’s market value.
The company recently announced a crackdown on fake accounts and pledged to “invest in improving the health of the public conversation”.
In a letter to shareholders, Twitter blamed the introduction of the General Data Protection Regulation (GDPR) in May for part of its decline in monthly users. GDPR is a new EU law that restricts how companies may use the personal information of Europeans. The drop, it said, was due to “decisions we have made to prioritise the health of the platform, to not move to paid SMS carrier relationships in certain markets and, to a lesser extent, GDPR”.
Twitter also projected that its number of monthly active users would continue to fall in the current quarter.
In a call after the announcement, Jack Dorsey, the chief executive, said that his company would “prioritise the long-term health of Twitter over nearterm metrics”. The social network recently purged fake accounts on its platform, which is likely to have contributed to the dip in active users.
The business exceeded revenue expectations, however, bringing in $711m (£542m) compared to analyst estimates of $696m.
It also announced a record profit and its third consecutive profitable quarter, with net income of $100m. In April, the company announced the second profit in its history after an unexpected leap in advertising revenue.
Twitter said yesterday that it expected its profitability to continue throughout the rest of 2018. Twitter’s advertising revenue has remained strong, and Abi Jacks, director of marketing at Rakuten Marketing, said that it had released some clever advertising features.
“Twitter has endured a tricky relationship with investors,” Ms Jacks said, “but the latest earnings show it is not having the same trouble with advertisers.”
She added: “Though the platform captures less of the limelight for its recent advancements – not quite as notable as shoppable AR features – there have been some smart developments.”
Adverts on Twitter purchased during the start of the World Cup in June brought in $30m in revenue, it said.
The company also said that revenue from markets including Japan and China had increased. Ned Segal, Twitter’s chief financial officer, said that the company “definitely learnt things from Japan”, including features such as bookmarking content shared on the platform and the need for a raised character limit for tweets.