Twitter lost monthly active users in Q4
Shares in Twitter took a brief nosedive overnight as the company revealed it had lost users over the past three months.
The company’s stock price fell 13% in after-hours trading on the NYSE. The shares then bounced back but then started a longer, slower decline.
Twitter’s latest results suggest that its monthly active user growth has stopped entirely. The company’s core user base fell to 305 million as of the end of December, from 307 million in the previous quarter.
In a letter to shareholders, Twitter executives downplayed the decline as a temporary issue, stating that the company has already seen signs of a recovery in January. But as the stock price decline shows, shareholders reacted with scepticism.
Twitter reported a 48% year-on-year increase in revenue for the quarter to $710 million, with advertising revenue up by the same percentage to $641 million. But this was below Wall Street expectations.
The company also missed analysts’ estimates in terms of its guidance for the current quarter. Twitter expects first-quarter revenue of between $595 million and $610 million.
Dr Sotirios Paroutis, associate professor of strategic management at Warwick Business School, commented that the news is not all doom and gloom.
“Not being able to add any new active users in the last quarter will disappoint some, particularly investors, yet it did see active advertisers go up by almost 90% year-on-year,” he said.
“Plus, historically, Q4 has been a slow quarter for Twitter, while in 2016 the US elections and the Olympics will be two big events that will be expected to help push their active users up.”
Twitter has meanwhile been experimenting with ways to increase adoption and engagement. The company recently announced a new timeline feature aimed at making it easier for users to catch important tweets.
The feature will allow users to opt in to having the most important or popular tweets on their timeline shown first, above the regular timeline sorted by time.
Rumours are also circulating that Twitter is considering lifting the character limit of a single tweet from 140 to 10,000.
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