Twitter investors still fear that the social-media company won’t be able to keep up with the growth of Facebook, its larger rival. It is true that Twitter reported on Monday that its revenue more than doubled once again in the third quarter, reaching $361 million, but investors still seem inconvincible.
Twitter’s users growth is what investors are interested in, and it seems that the numbers have slowed again in recent quarters
“We had another very strong quarter financially. I’m happy with the strategies and the quality of the work we’re doing but given our significant aspirations and the breadth of the opportunity in front of us, it’s more critical than ever that we increase our overall pace of execution.”
said Chief Executive Dick Costolo.
The social-media company shares sank approximately 10% in after-hours trading on Monday, reaching $43,65. This took away roughly $3 billion in market value, in a drop that erased many of the stock advances Twitter made three months ago when shares had gone up 29%. As such, the San Francisco company had even more difficulty in convincing its investors that it is bigger than it seems, especially since Wall Street remains focused on user gains rather than money making. As they see it, the more users signing up and spending time tweeting, the more potential for advertising, which remains Twitter’s main revenue source.
Through September, the company added 13 million monthly active users, Twitter claimed, reaching 284 million worldwide users, adding up to a 4.8% increase. However, despite this increase, in line with some analyst’s expectations, investors still fear that the slower pace (inferior to the 6.3% added in the previous quarter) is not good news.
On Monday, Mr. Costolo described Twitter’s total audience as geometrically eccentric circles, saying that there are core users, those visiting the site without logging in and those seeing twitter content embedded on other sites. The latter group is currently the syndicated audience.
Apart from this one metric, it’s becoming less clear how “engaged” Twitter users are on the website. Timeline views, for instance, the company’s own measure of activity, has decreased 7% to 636 views per monthly active user. However, this metric fails to reflect other forms of engagement, such as shared tweets or profile pages visits.
“I don’t blame anyone who relies upon those metrics, but the long-term story will show that they aren’t good measures.”
Ken Sena, Evercore analyst said.
“We’re seeing good momentum behind Twitter from a demand standpoint, but it’s still early as a platform,”
Chris Amos, chief marketing at Ampush said.