WASHINGTON, Feb 8, 2019 (BSS/AFP) – Twitter shares took a pounding
Thursday as an unsettling update on its global user base offset upbeat
figures on revenues and profits in the past quarter.
Shares skidded 9.8 percent to close at $30.80 following Twitter’s fourth
quarter update, which showed a consistent profit trend despite a shrinking
number of users.
The platform said it posted a $255 million profit in the final three
months of 2018, compared with $91 million a year earlier, as revenues rose 24
percent to $909 million. It marked the fifth straight quarterly profit after
years of losses.
Chief executive Jack Dorsey said the results reflect Twitter’s efforts at
“promoting healthy conversation” by weeding out fraudulent accounts used for
abuse, harassment and political influence campaigns.
“We think it is a growth vector over the long term, and it’s the right
thing to do for people on Twitter and in the world,” Dorsey told analysts on
a conference call.
Investors digested the data showing a decline in Twitter’s base of monthly
active users to 321 million, nine million down from a year earlier and five
million from the prior quarter — and the company’s decision to stop using
that measurement.
Twitter said it would instead report “monetizable” daily active users in
the US and worldwide, a better reflection of the audience viewing ads.
Using that measure, Twitter showed a base of 126 million worldwide, up
nine percent over the year. That included 27 million in the United States and
99 million internationally who log in and use Twitter on applications where
ads may be viewed.
The figures suggest that Twitter, which has a strong following among
celebrities, journalists and politicians, remains far from gaining mass
appeal, with fewer users than rivals including Snapchat.
But this measure, Twitter said, is not “comparable to current disclosures
from other companies, many of whom share a more expansive metric that
includes people who are not seeing ads.”
– ‘High uncertainty’ –
Some analysts said the results highlight challenges for Twitter’s goal of
sustaining growth and profitability.
“We have continuing concerns about users and growth,” said Scott Kessler
of the research firm CFRA.
“Overall, we see decelerating top-line growth and further spending for a
company/stock trading at valuation premiums to peers.”
Ali Mogharabi of Morningstar said the stall in user growth may impact ad
revenues over time and maintained that Twitter remained a “very-high-
uncertainty name.”
Markets also appeared unsettled by a weaker-than-expected revenue outlook
for the current quarter and rising expenses.
– ‘Able to grow’ –
Jasmine Enberg of the research firm eMarketer said the results were
nonetheless positive.
“Twitter’s Q4 earnings prove that the company is still able to grow its
revenues without increasing its user base,” she said.
“The falloff in monthly active users is likely a continuation of Twitter’s
efforts to remove questionable accounts.”
According to eMarketer, Twitter will boost its worldwide ad revenue this
year but its share of the global market will drop from 0.9 percent last year
to 0.8 percent. And Twitter’s share of worldwide social network users is
projected to drop slightly from 9.8 percent in 2019 to 9.3 percent in 2022.
Twitter, which has struggled to keep up with fast-growing rivals like
Facebook and Instagram, said it changed the measure for its user base to
reflect “our goal of delivering value to people on Twitter every day and
monetizing that usage.”
Twitter and other online platforms have been forced to confront issues of
misinformation, harassment and abusive conduct which have turned people away
from some social media.
A tweet by the company said the focus on health and safety remains a
priority.
“We will cont. our efforts to remove spammy + suspicious accts. from our
service + to prevent their creation in service of a healthier public
conversation,” it said.