The service is shedding users as its competitors just keep growing
Twitter is in a lot of trouble.
This has long been the prevailing narrative. But the San Francisco firm’s problems came into stark relief in its fourth-quarter earnings report, posted Feb. 10.
As competing social platforms from Facebook to Snapchat continue to add users, Twitter’s user base remained flat during the quarter ending in December, sitting at 320 million on a sequential basis. Worse still, the social network bled about 1 million users in the U.S.
It’s the first time Twitter has shed users in its home country.
On top of this, if you exclude SMS-only users who access Twitter solely via text messages, Twitter’s global user base also declined, from 307 million in Q3 to 305 million in Q4. (The company posted meager gains on a year-over-year basis, but the sequential figures provide a window into the performance of recently reinstated CEO Jack Dorsey.)
Investors hammered the company’s stock on the news, with shares briefly falling more than 11% in after-hours trading, then rebounding to a 5% loss. That comes after the stock closed at a record low of $14.40 on Tuesday.
Still, there are silver linings in Twitter’s financials. The company managed to match Wall Street analysts’ expectations of $710 million in revenue, a 48% increase year over year. And the social network posted adjusted earnings of 16¢ per share, beating estimates of 12¢ per share.
But Twitter’s problem has never been about making money. Wall Street is happy to watch tech companies burn through cash if they see potential for long-term growth. But there are serious doubts that Twitter has the ability to reach a global audience, then effectively monetize that market the way Facebook has done. Now that Twitter’s user base is officially in decline, things for the company and Dorsey alike will only get tougher from here.